STRIDE INC (NYSE:LRN) – A Quality Stock with Strong Growth and Financial Health

STRIDE INC (NYSE:LRN) stands out as a compelling candidate for quality investors, meeting key criteria for revenue growth, profitability, and financial stability. The company, a technology-based educational services provider, has demonstrated consistent performance and efficient capital allocation, making it a noteworthy pick in the Caviar Cruise screen.

Why STRIDE INC Fits the Quality Investing Criteria

• Strong Revenue and EBIT Growth
  Over the past five years, LRN has delivered an annual revenue growth rate of 10.8%, comfortably exceeding the screen’s 5% threshold. More impressively, its EBIT growth averaged 40.6%, indicating improving operational efficiency and profitability.

• High Return on Invested Capital (ROIC)
  LRN’s ROIC (excluding cash and goodwill) stands at 36.0%, well above the 15% benchmark. This reflects the company’s ability to generate strong returns from its investments, a hallmark of a quality business.

• Healthy Debt Management
  The company’s debt-to-free-cash-flow ratio is 2.09, meaning it could repay its debt in just over two years using current cash flows. This conservative leverage position suggests financial resilience.

• Profit Quality
  LRN’s five-year average profit quality—measured as free cash flow relative to net income—is 120.4%, indicating it converts accounting profits into real cash at an exceptional rate.

Fundamental Strengths

The fundamental analysis report assigns LRN a score of 7 out of 10, highlighting:

• Profitability: High marks for ROIC (14.55%), profit margins (13.1%), and operating margins (16.5%).
• Financial Health: A solid Altman-Z score (7.36) and strong liquidity metrics (current ratio of 5.61).
• Growth Outlook: Analysts expect continued EPS growth (21.5%) and revenue expansion (10.8% annually).

While the stock trades at a P/E of 21.6—slightly above industry averages—its growth prospects and profitability justify the valuation.

For more quality stocks identified by the Caviar Cruise strategy, explore the Caviar Cruise screener.

Disclaimer

This is not investing advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.