Stride Stock Gains 20% in a Month: Buy Now or Hold Tight?

Stride, Inc. LRN has staged a sharp rebound, climbing 20% over the past month and outperforming the Zacks Schools industry and the S&P 500. The stock now trades around $84.45 as of Feb. 12, 2026, well above recent lows but still meaningfully below its 52-week high of $171.17.

LRN’s 1-Month Share Price Performance

The rally has been driven by improving execution, stabilization in enrollments and better-than-expected second-quarter fiscal 2026 results. The key question for investors is whether this momentum can continue or whether the stock has already priced in the recovery.

Technically, LRN is trading above its 50-day moving average but remains below its 200-day moving average, suggesting improving near-term sentiment but incomplete long-term recovery. The key question for investors is whether the recent surge reflects a sustainable turnaround or simply a relief rally after earlier platform-related disruptions.

Solid Q2 Performance Reinforces the Recovery Narrative

Stride’s second-quarter fiscal 2026 results support the recent stock strength. Revenue rose 7.5% year over year to $631.3 million, while adjusted operating income increased 17% year over year to $159.0 million. Adjusted EBITDA climbed 17% year over year to $188.1 million and adjusted earnings per share (EPS) improved 5.5% year over year to $2.50. 

For the first six months of fiscal 2026, revenue grew 10% to $1.25 billion and net income jumped 22.6% year over year to $168.3 million. This operating leverage reflects disciplined cost management and strong enrollment momentum.  

Importantly, total enrollments reached a record 248.5K in the quarter, up 7.8% year over year. Career Learning enrollments were particularly strong, rising 17.6% year over year to 111.5K, underscoring growing demand for job-focused and middle-to-high school career pathways. 

Management reaffirmed fiscal 2026 revenue guidance of $2.48-$2.555 billion and raised adjusted operating income guidance to $485-$505 million, signaling confidence that recent operational challenges are largely behind the company.

Demand Tailwinds Remain Intact

Stride’s long-term thesis rests on structural demand for virtual and alternative education. According to management commentary, application volumes remain strong and near record levels, even with reduced marketing intensity. That indicates organic demand remains healthy.

Enrollment trends reflect this strength. General Education enrollments increased modestly, while Career Learning delivered double-digit growth. Career Learning middle and high school revenue surged 29.3% year over year, offsetting softer General Education revenue, which declined 3.6% due to mix and funding timing.

On the macro side, dissatisfaction with traditional K-12 education, safety concerns and demand for flexible schooling models continue to support virtual options. Stride’s scale and multi-state presence position it to capture this secular shift.

The company also highlighted that withdrawal rates have returned to historical norms early in the second semester, reducing a key risk that had weighed on sentiment last quarter.

Platform Stabilization Eases Overhang

Earlier in the fiscal year, Stride faced platform implementation issues that pressured customer experience and attrition. Management now states that core platform issues are largely resolved and the user experience is being enhanced in the fiscal third quarter.

Call volumes related to login issues dropped more than 90% week over week after fixes were implemented, offering tangible evidence of stabilization. The company is also working toward greater architectural control to avoid excessive reliance on third parties.

While the episode exposed operational risk, the recovery appears credible, and the decision to prioritize stability over aggressive in-year enrollment growth suggests a disciplined approach.

LRN’s Financial Strength and Capital Allocation Support the Story

Stride ended the fiscal second quarter with $676 million in cash, cash equivalents and marketable securities. Leverage remains low, with a leverage ratio of just 0.07X, giving management flexibility for organic investments, M&A and buybacks.

The board authorized a $500 million share repurchase program through October 2026, and roughly $89 million had been completed as of Dec. 31, 2025. This capital return framework provides downside support while funding growth initiatives in technology and curriculum.

Valuation & Estimate Revisions: Reasonable but Not Deep Value

From a valuation standpoint, LRN trades at 9.47X forward 12-month P/E, below the industry average of 12.66X and below its three-year median of 14.06X. Its historical valuation range of 7.09X to 21.00X suggests current levels are neither distressed nor stretched.

LRN’s Valuation P/E (F12M)

Over the past 60 days, the Zacks Consensus Estimate for fiscal 2026 EPS has increased to $8.36 from $8.26. Fiscal 2026 EPS is projected to grow 3.2% from a year ago, with revenue growth of roughly 5%. Fiscal 2027 EPS is expected to increase 10.7% on 4.9% revenue growth. These modest upward revisions align with stabilization and continued demand, but not hypergrowth.

LRN’s Earnings Estimate

Key Challenges to Watch for LRN Stock

Despite improving fundamentals, risks remain. Revenue per enrollment in General Education declined 3.6% year over year due to mix and funding dynamics. State funding variability, regulatory scrutiny and enrollment caps could constrain upside.

Management also expects full-year gross margin to be similar to fiscal 2024 due to ongoing platform-related costs. Additionally, Adult Learning revenue declined 28% year over year, reflecting continued rightsizing in that segment.

Competition from traditional school districts expanding online offerings and from private education technology platforms remains a structural risk.

How Peers Frame the Competitive Landscape for Stride

In the alternative and education technology space, Grand Canyon Education LOPE, Perdoceo Education PRDO and Adtalem Global Education ATGE represent important comparables.

Grand Canyon focuses on higher education services and online program management. It has built strong partnerships with universities and benefits from stable enrollment trends. While Grand Canyon operates in a different segment, its execution in online delivery sets a competitive benchmark.

Perdoceo concentrates on career-focused postsecondary programs. It emphasizes affordability and employment outcomes. Like Stride’s Career Learning unit, Perdoceo targets students seeking workforce alignment, creating overlap in value proposition.

Adtalem serves healthcare and professional education markets. It benefits from resilient demand in specialized fields. Although Adtalem is more niche-focused, its online and hybrid capabilities highlight the broader shift toward flexible learning models.

Together, Grand Canyon, Perdoceo and Adtalem illustrate a competitive environment where scale, regulatory compliance and student outcomes determine long-term success.

Buy Now or Hold Tight?

Stride’s recent 20% rally is supported by improving fundamentals, record enrollments and reaffirmed guidance. Platform stabilization removes a key overhang, and valuation remains below industry averages.

However, revenue growth is mid-single digit, General Education revenue per enrollment faces pressure and management is deliberately prioritizing stability over aggressive expansion. With the stock carrying a Zacks Rank #3 (Hold), the risk-reward appears balanced rather than asymmetric. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

For long-term investors, LRN offers exposure to structural growth in virtual and career-oriented education, backed by a strong balance sheet. After the recent surge, though, holding existing positions while watching enrollment trends and funding dynamics may be the more prudent move than chasing the rally.

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This article originally published on Zacks Investment Research (zacks.com).

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