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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 Strong Q2 Performance and Outlook

Scholastic reported a 1% increase in revenues to $551.1 million, with operating income improving to $95 million and adjusted EBITDA increasing to $122.5 million. The company's EPS came out at $2.57, beating estimates of $2.07. The strong performance was driven by the children's book publishing and distribution segment, with school book fairs performing well and major global franchises like Dog Man and the Hunger Games series driving sales.

Publication Date: Dec -20

📋 Highlights
  • Adjusted EBITDA Growth: 13% increase in the second quarter, driven by strong performance in children's book publishing.
  • Sale Leaseback Proceeds: Unlocked $400 million in net cash, to be used for shareholder returns and debt reduction.
  • Shareholder Returns: $500 million returned via buybacks and dividends since FY2022, reducing shares by 25%.
  • Children’s Publishing Profit: Segment adjusted operating profit rose to $108.8 million on 4% revenue growth to $380.9M.
  • International Segment Performance: Revenue of $89.5 million, with adjusted operating income up to $12.8 million (vs. $7.1M prior year).

Segment Performance

The Children's Book Publishing and Distribution segment delivered strong results, with revenues increasing 4% to $380.9 million and segment adjusted operating profit improving to $108.8 million. Trade publishing also delivered a strong quarter, with revenues increasing 7% to $110.4 million. The international segment saw strong performance across global markets, with revenues up $3.3 million from the prior year period, driven by the new Dog Man title and new additions across other major franchises.

Cash Flow and Capital Allocation

Net cash provided by operating activities was $73.2 million, with free cash flow of $59.2 million. The company continued to return excess cash to shareholders through its regular dividend and share repurchases. Scholastic had borrowings of $235 million under its unsecured revolving credit facility and net debt of $186.6 million.

Outlook and Valuation

The company expects fiscal 2026 revenues to be level with or slightly above the prior year, with adjusted EBITDA and free cash flow reaffirmed, excluding the impact of the sale leaseback transactions. With a P/E Ratio of -209.21 and a P/S Ratio of 0.41, the market appears to be pricing in some challenges. However, the EV/EBITDA ratio of 8.55 suggests a relatively reasonable valuation. The Dividend Yield of 2.96% and Free Cash Flow Yield of 6.86% are also attractive. Analysts estimate next year's revenue growth at 1.5%, which may provide a positive catalyst for the stock.

Sale Leaseback Transactions

The sale leaseback transactions are expected to generate net cash proceeds of over $400 million, which will be used to return excess cash to shareholders through share repurchases and other means. The company's goal is to return to moderate levels of leverage, consistent with its recent levels, and to continue returning excess cash to shareholders.

3. NewsRoom

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Here's Why Momentum in Scholastic (SCHL) Should Keep going

Feb -06

Source: zacks.com

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SG Americas Securities LLC Buys Shares of 14,489 Scholastic Corporation $SCHL

Jan -26

Source: defenseworld.net

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SCHOLASTIC TO MARK 40 YEAR ANNIVERSARY OF ANN M. MARTIN'S BELOVED THE BABY-SITTERS CLUB® SERIES WITH EXCITING NEW PUBLISHING IN 2026

Jan -22

Source: prnewswire.com

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Scholastic Appoints Jeffrey Mathews as President of Scholastic Education, Adding to Current Role as Chief Growth Officer

Jan -05

Source: prnewswire.com

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Newmark Advises Scholastic on $386 Million Sale-Leaseback of New York City Headquarters

Dec -19

Source: prnewswire.com

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Scholastic Corporation (SCHL) Q2 2026 Earnings Call Transcript

Dec -19

Source: seekingalpha.com

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Here's What Key Metrics Tell Us About Scholastic (SCHL) Q2 Earnings

Dec -18

Source: zacks.com

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Scholastic (SCHL) Q2 Earnings Top Estimates

Dec -18

Source: zacks.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: 5.7/10

Value: 8.5

Growth: 3.3

Quality: 5.2

Yield: 9.0

Momentum: 3.5

Volatility: 4.7

1-Year Total Return ->

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Townsquare Media

A-Score: 5.4/10

Value: 9.7

Growth: 3.8

Quality: 5.3

Yield: 9.0

Momentum: 0.0

Volatility: 4.7

1-Year Total Return ->

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Scholastic

A-Score: 5.4/10

Value: 8.2

Growth: 4.2

Quality: 3.9

Yield: 5.0

Momentum: 7.0

Volatility: 4.0

1-Year Total Return ->

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John Wiley & Sons

A-Score: 5.3/10

Value: 7.5

Growth: 2.9

Quality: 6.2

Yield: 7.0

Momentum: 2.0

Volatility: 6.0

1-Year Total Return ->

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EDC

A-Score: 3.6/10

Value: 9.8

Growth: 2.7

Quality: 4.2

Yield: 1.0

Momentum: 2.0

Volatility: 1.7

1-Year Total Return ->

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Gannett Co

A-Score: 3.5/10

Value: 5.7

Growth: 3.6

Quality: 4.3

Yield: 0.0

Momentum: 4.5

Volatility: 2.7

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

32.44$

Current Price

32.44$

Potential

-0.00%

Expected Cash-Flows