Why Scholastic Is Set to Slide in 2013 (SCHL)

Why Scholastic Is Set to Slide in 2013

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, children's publishing and education company Scholastic (NASDAQ: SCHL ) has received an alarming one-star ranking.

With that in mind, let's take a closer look at Scholastic and see what CAPS investors are saying about the stock right now.

Scholastic facts

Headquarters (founded)	New York (1920)
Market Cap	$907.4 million
Industry	Publishing
Trailing-12-Month Revenue	$2.1 billion
Management	Chairman/CEO Richard Robinson CFO Maureen O'Connell
Return on Equity (average, past 3 years)	9%
Cash/Debt	$193.1 million / $210.9 million
Dividend Yield	1.7%
Competitors	McGraw-Hill Companies (NYSE: MHFI ) Pearson (NYSE: PSO ) Random House

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 33% of the 106 members who have rated Scholastic believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, JohnStuartMill, succinctly summed up the Scholastic bear case for our community:

The publishing industry will continue its gradual slide down. [Scholastic] will lead the pack down with its recent cut in fiscal guidance. Cost cutting will help some, but it still leaves you with a diminished corporation. Cost cutting is targeted at [$20M] to [$30M]. This is all to meet the current revised fiscal guidance. However, I do like the fact they have agreed to withhold management bonuses for fiscal 2013 (but I'll believe it when I see it).

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