Can Stride Stay Ahead in a Crowded Digital Education Field?

Stride, Inc. LRN continues to demonstrate strength in a digital education sector that is rapidly evolving and increasingly competitive. With enrollment up more than 21% in third-quarter fiscal 2025 and record-setting adjusted operating income, Stride is proving it can scale while maintaining operational efficiency.

The macro environment is favorable. Parent dissatisfaction with traditional public education remains high and interest in career-focused alternatives is rising. Stride is capitalizing on both. Its Career Learning segment posted 33% revenue growth in third-quarter fiscal 2025, outpacing General Education. Yet CEO James Rhyu admits the company has not fully cracked the code on building a standalone enrollment funnel for career programs, an area that could drive long-term differentiation.

Stride’s efforts to expand socialization, through virtual platforms like K12 Zone and real-world meetups, also address a longstanding concern about online learning. These initiatives are gaining traction, enhancing the student experience and possibly aiding retention.

Financially, Stride is executing well. Gross margins hit 40.6% in third-quarter fiscal 2025 and management raised full-year guidance, signaling confidence in continued performance. Importantly, less than 5% of revenues are tied to federal funding, insulating the model from policy shifts.

Still, the path forward is not without challenges. With competitors pushing deeper into digital content, credentials and K-12 partnerships, Stride must innovate faster, particularly in lower grades and career pathways.

In short, Stride has momentum, but staying ahead will require not just scale but sharper focus on distinctiveness, technology and outcomes.

LRN’s Price Performance, Valuation and Estimates

LRN’s shares have surged 30.3% in the past six months compared with the industry’s rise of 6.9%. In the same time frame, other industry players, such as American Public Education, Inc. APEI and Adtalem Global Education Inc. ATGE, have seen their stocks gain 17.1% and 31.3%, respectively.

Price Performance

LRN stock is currently trading at a premium. It is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 18.38X, up from the industry average of 15.92X. Then again, other industry players, such as American Public Education and Adtalem Global Education, have P/E ratios of 16.17X and 16.16X, respectively.

P/E (F12M)

The Zacks Consensus Estimate for fiscal 2025 earnings per share increased to $7.09 from $6.67 in the past 60 days.

Moreover, the company’s earnings for fiscal 2025 and 2026 are likely to witness robust growth of 51.2% and 9.4%, respectively. Meanwhile, American Public Education and Adtalem Global Education earnings in fiscal 2025 are likely to witness growth of 30.1% and 158.2%, respectively.

The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research