Call it corporal corporate punishment: Scholastic
After reporting an 8% decline in quarterly net income -- not to mention earnings per share of $1.59 compared with $1.80 this time last year -- Scholastic's stock shed 11.5% of its value. In one day.
Ouch, as the NFL's color commentary guys like to say. That's gotta hurt.
Fools of the cheapskate persuasion, on the other hand, may well find themselves asking if now is a good time for contrarian types to buy.
Survey says: Probably not.
True, thanks in large part to sales of the latest Harry Potter book, free cash flow at Scholastic rose to $286.2 million versus $70.7 million this time last year. What's more, in its announcement, Scholastic asserts that it has reduced its overhead by some 15%. No small feat, that.
That said, there's no escaping the fact that Scholastic's business model is tied to the mercurial tastes of the book-buying public, a public that -- in this company's case -- is substantially made up of a target demographic that was in diapers not so long ago. And where the kids are concerned, no forecast can be trusted. I mean, who could have predicted that Sony BMG
With that pop-culture conundrum in mind -- and even after Friday's fall -- I prefer bigger publishing industry players such as McGraw-Hill
For related book-smart Foolishness:
Fools, now is the time to open your hearts and wallets to worthy causes! Please support our five Foolish charities at www.foolanthropy.com .
Shannon Zimmerman is the lead analyst for the Fool's Champion Funds newsletter service and doesn't own any of the companies mentioned above. The Fool has a strict disclosure policy.
