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1. Company Snapshot

1.a. Company Description

Scholastic Corporation publishes and distributes children's books worldwide.It operates in three segments: Children's Book Publishing and Distribution, Education Solutions, and International.The Children's Book Publishing and Distribution segment publishes and distributes children's books, e-books, media, and interactive products through its school book club and fair channels, as well as trade channels.


Its original publications include the Harry Potter, Hunger Games, Bad Guys, Baby-Sitters Club graphic novels, Magic School Bus, Captain Underpants, Dog Man, Wings of Fire, Cat Kid Comic Club, Goosebumps, and Clifford The Big Red Dog; and licensed properties comprise the Peppa Pig and Pokemon.In addition, this segment publishes and creates books plus and novelty products for children, including titles, such as the Pastel Studio, Mini Clay World Candy Cart, LEGO Gear Bots, Never Touch series, and other titles under the Klutz and the Make Believe Ideas names; and non-fiction books under the Children's Press and Franklin Watts names.The Education Solutions segment publishes and distributes classroom magazines under the Scholastic News, Scholastic Scope, Storyworks, Let's Find Out, and Junior Scholastic names; supplemental and classroom materials and programs, and related support services; and print and on-line reference, and non-fiction products, as well as consulting services.


The International segment offers original trade and educational publishing programs; distributes children's books, digital educational resources, and other materials through school-based book clubs, school-based book fairs, and trade channels; produces and distributes magazines; and provides online subscription services.The company distributes its products and services directly to schools and libraries through retail stores and the Internet.Scholastic Corporation was founded in 1920 and is headquartered in New York, New York.

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1.b. Last Insights on SCHL

Scholastic Corporation's recent performance was driven by strong Q4 2025 earnings and revenue beat, with quarterly earnings of $0.87 per share surpassing the Zacks Consensus Estimate of $0.85 per share. The company's Adjusted EBITDA came in line with original guidance, and it returned over $90 million to shareholders during fiscal year 2025. Additionally, Scholastic declared a quarterly cash dividend of $0.20 per share for the first quarter of fiscal 2026, payable on September 15, 2025. The company's strategic integration of Trade Publishing, Book Fairs, and Book Clubs into a new Children's Book Group is expected to expand its reach and value.

1.c. Company Highlights

2. Scholastic's Q1 Earnings: A Seasonally Weak Quarter with Promising Initiatives

Scholastic reported a 5% decline in revenues to $225.6 million, resulting in an operating loss of $81.9 million, slightly improved from the prior year's loss of $85.6 million. The actual EPS loss of $2.52 per share was wider than the estimated loss of $2.44 per share. Despite the seasonally weak quarter, the company's Children's Book Publishing and Distribution segment showed solid trade sales driven by strong demand for global franchises, such as Suzanne Collins' "Sunrise on the Reaping" with 3.7 million copies sold worldwide.

Publication Date: Oct -28

📋 Highlights
  • Q1 Operating Loss Improved: Operating loss narrowed to $81.9M from $85.6M YoY, aligning with historical seasonality.
  • Trade Sales Momentum: Suzanne Collins' "Sunrise on the Reaping" sold 3.7M copies globally, with Dogman preorders tracking at prior release levels.
  • Entertainment Growth Drivers: Clifford franchise projected to exceed 10M monthly YouTube views by year-end, backed by new publishing and partnerships.
  • Cost Optimization: $15–20M in annualized cost savings achieved through SG&A reductions, improving adjusted operating losses.
  • International Expansion: Focus on ESL programs and markets like India/Philippines, with U.K./Australia book fairs showing strong performance.

Segment Performance

The Entertainment segment is poised for renewed growth, with industry greenlighting accelerating and the company's 360-degree IP strategy gaining traction. The company is leveraging YouTube as a launchpad for new properties, with Clifford expected to surpass 10 million monthly views by calendar year-end. As Haji Glover mentioned, "We're in the early stages of expanding our digital content to new platforms, with the potential to increase from 2 to 9 platforms," which could drive future growth.

Operational Efficiency and Cost Savings

The company has taken steps to streamline operations and reduce expenses, with $15-20 million in cost savings already realized, according to Brendan Michael McCarthy. This is expected to benefit the company's financials going forward. Additionally, the company is managing retail market uncertainty, particularly with regards to tariffs, and is confident in its plan to continue investing in growth.

Valuation and Outlook

Scholastic's current valuation metrics indicate a Price-to-Sales Ratio of 0.44 and an EV/EBITDA of 11.83. Analysts estimate revenue growth of 2.6% for the next year. While the company's guidance for fiscal year 2026 is affirmed, with revenue growth expected between 2% to 4%, adjusted EBITDA between $160 million to $170 million, and free cash flow between $30 million to $40 million, the stock's current price may already reflect some of these expectations.

Cash Flow and Free Cash Flow

The negative variance in cash flow and free cash flow was driven by revenue and capital expenditure. However, the company expects a stronger second half and is confident in its ability to make up for the shortfall in cash flow and free cash flow over the balance of the year, as Haji Glover stated, "We're tightly watching our spending on capital expenses and are confident in our ability to make up the shortfall."

3. NewsRoom

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Scholastic Corporation Announces Date for Second Quarter Fiscal 2026 Earnings Release and Conference Call

Dec -04

Source: prnewswire.com

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Scholastic to Sell NYC Headquarters as Part of Turnaround Efforts

Dec -02

Source: wsj.com

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Scholastic Unlocks Significant Value Through Sale-Leasebacks of Owned Real Estate Assets

Dec -02

Source: prnewswire.com

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Bank of New York Mellon Corp Trims Position in Scholastic Corporation $SCHL

Nov -22

Source: defenseworld.net

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Acadian Asset Management LLC Acquires 136,903 Shares of Scholastic Corporation $SCHL

Nov -14

Source: defenseworld.net

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Why Scholastic Stock Was Flopping on Friday

Sep -19

Source: fool.com

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Scholastic share price plunge 13% after weak first quarter results

Sep -19

Source: invezz.com

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Scholastic Stock Plunges as Uncertainty Over Government School Funding Hurts Results

Sep -19

Source: investopedia.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.09%)

6. Segments

Children`s Book Publishing & Distribution

Expected Growth: 1.2%

Scholastic's Children's Book Publishing & Distribution segment growth of 1.2% is driven by increasing demand for children's literature, popularity of book series, and strategic partnerships with authors and illustrators. Additionally, the company's focus on digital transformation, expansion into new markets, and effective cost management contribute to its steady growth.

Education

Expected Growth: 0.8%

Scholastic Corporation's Education segment growth of 0.8% is driven by increasing demand for digital learning solutions, expansion of online educational resources, and strategic partnerships with schools and educational institutions. Additionally, the company's focus on STEM education and literacy programs contributes to the growth.

International

Expected Growth: 1.1%

Scholastic Corporation's 1.1% international growth is driven by increasing demand for children's books and educational materials, expansion into new markets, and strategic partnerships with schools and governments. Additionally, the company's digital transformation efforts, including e-books and online learning platforms, are contributing to growth in international markets.

7. Detailed Products

Children's Books

Scholastic publishes and distributes a wide range of children's books, including picture books, early readers, chapter books, and young adult fiction and nonfiction.

Book Fairs

Scholastic Book Fairs are in-school events that bring a curated selection of books to schools, allowing children to browse and purchase books, with a portion of the proceeds going back to the school.

Book Clubs

Scholastic Book Clubs offer a monthly selection of books to children, often at discounted prices, with options for teachers and parents to purchase books for their students or children.

Digital Learning Platforms

Scholastic offers a range of digital learning platforms, including reading and literacy programs, math and science resources, and educational games and activities.

Educational Resources

Scholastic provides a range of educational resources, including teacher resources, lesson plans, and educational software, to support teaching and learning.

Trade Books

Scholastic publishes and distributes a range of trade books, including fiction and nonfiction titles for children and adults.

8. Scholastic Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Scholastic Corporation faces moderate threat from substitutes, as digital learning platforms and online educational resources are increasingly popular, but the company's strong brand recognition and diversified product offerings mitigate this threat.

Bargaining Power Of Customers

Scholastic Corporation's customers, primarily parents and educators, have limited bargaining power due to the company's dominant market position and wide range of products and services.

Bargaining Power Of Suppliers

Scholastic Corporation's suppliers, including authors, illustrators, and printers, have moderate bargaining power due to the company's reliance on high-quality content and materials, but the company's scale and diversification mitigate this risk.

Threat Of New Entrants

Scholastic Corporation faces a low threat from new entrants, as the company's established brand, extensive distribution network, and significant investments in digital infrastructure create barriers to entry.

Intensity Of Rivalry

Scholastic Corporation operates in a highly competitive industry, with intense rivalry from established players and new entrants, particularly in the digital learning space, which requires the company to continuously innovate and adapt to changing market conditions.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 7.98%
Debt Cost 3.95%
Equity Weight 92.02%
Equity Cost 9.22%
WACC 8.80%
Leverage 8.67%

11. Quality Control: Scholastic Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Deluxe

A-Score: 5.8/10

Value: 7.9

Growth: 3.3

Quality: 4.6

Yield: 9.0

Momentum: 5.0

Volatility: 4.7

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Townsquare Media

A-Score: 5.5/10

Value: 9.3

Growth: 3.7

Quality: 4.6

Yield: 9.0

Momentum: 1.0

Volatility: 5.3

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John Wiley & Sons

A-Score: 4.9/10

Value: 5.2

Growth: 2.9

Quality: 5.6

Yield: 7.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

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Scholastic

A-Score: 4.9/10

Value: 7.3

Growth: 4.2

Quality: 3.7

Yield: 5.0

Momentum: 6.0

Volatility: 3.3

1-Year Total Return ->

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Gannett Co

A-Score: 3.5/10

Value: 7.4

Growth: 3.6

Quality: 4.2

Yield: 0.0

Momentum: 3.0

Volatility: 2.7

1-Year Total Return ->

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EDC

A-Score: 3.3/10

Value: 9.6

Growth: 2.7

Quality: 4.1

Yield: 1.0

Momentum: 1.0

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

28.41$

Current Price

28.41$

Potential

-0.00%

Expected Cash-Flows