Shares of K-12 online education software stock Stride (NYSE:LRN) -- the company formerly known as K12 -- got an A grade on Wall Street this afternoon, rising 7% through 12:30 p.m. EDT after its earnings report last night.
Expected to lose $0.14 per share on $359.5 million in sales in fiscal first-quarter 2022, Stride instead reported a disappointing $0.15-per-share loss -- that's the bad news.
The good news is that Stride reported sales of $400.2 million -- more than 10% above analysts' expected revenue for the quarter, and the company says it will keep on beating revenue expectations for the rest of this year.
Q1 revenue climbed 8% year over year as Stride managed to keep growing its business in the face of a widespread return to in-person learning in U.S. public schools. Unfortunately for Stride, "the return to normal seasonality in upfront school year expenses" flipped the company from a year-ago profit to a loss this time around.
The other good news, though, is that Stride thinks it can dig itself out of this Q1 hole by the end of the fiscal year. In new guidance, management forecasts that sales in fiscal 2022 will range from $1.56 billion to $1.6 billion. With adjusted operating income of $165 million to $180 million -- and an effective tax rate of from 28% to 30%, therefore -- management appears to be forecasting full year net profits of about $50 million, give or take. Applied to a share count of 40.4 million, that implies profits per share of $1.24.
Of course, the other bad news is that Wall Street wants to see profits of $1.78 per share, according to data from Yahoo! Finance. As a result, I fear that once investors do the math, today's stock price rise at Stride will end up getting walked back.