What Happened?
Shares of educational publishing and media company Scholastic (NASDAQ: SCHL) jumped 15.2% in the morning session after the company delivered strong first-quarter (fiscal Q3 2025) results, with profits significantly exceeding expectations as both EPS and EBITDA outperformed Wall Street's estimates.
A key driver of this performance was the continued strength in Children's Book Publishing and Distribution, which saw a 5% increase in sales, largely driven by growth in Book Fairs and Book Clubs. However, challenges persisted in Education Solutions, where sales declined 16% due to ongoing weakness in the supplemental curriculum market. This segment's struggles contributed to the company's softer revenue growth, with overall sales missing expectations and full-year EBITDA guidance falling short of forecasts.
Still, we think this was a decent quarter featuring some areas of strength but also some blemishes.
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What The Market Is Telling Us
Scholastic’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Scholastic and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 15.2% on the news that the company reported weak second quarter earnings results. Its revenue and EPS fell short of Wall Street's estimates. Revenue declined 10% due to resizing efforts (mostly affected Book Club revenue) to create a smaller, more profitable core business. In addition, the weakness was attributed to "lower supplemental curriculum product sales in Education Solutions and lower revenue per fair in the U.S. Book Fairs channel." Overall, this was a bad quarter for Scholastic.
Scholastic is up 1.8% since the beginning of the year, but at $21.53 per share, it is still trading 44.1% below its 52-week high of $38.53 from March 2024. Investors who bought $1,000 worth of Scholastic’s shares 5 years ago would now be looking at an investment worth $918.87.
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