Scholastic Corp (NASDAQ:SCHL) Posts Mixed Q2 FY2026 Results with EPS Beat and Revenue Miss

Scholastic Corp. (NASDAQ:SCHL), the renowned children's publishing and education company, delivered a quarter of mixed financial results for its fiscal 2026 second quarter. The performance highlights a now-familiar pattern for the company: earnings strength overshadowed by softer-than-anticipated top-line growth, a dynamic that appears to be shaping the market's initial reaction.

Earnings: A Clear Beat on Profitability

The standout figure from the report is the company's non-GAAP earnings per share (EPS). Scholastic reported EPS of $2.57 for the quarter, which represents a significant 24.2% beat over the analyst consensus estimate of $2.11. This double-digit growth in profitability underscores the company's ability to manage its operations effectively and leverage its high-margin publishing assets. The press release attributed this earnings growth directly to "best-selling global publishing," indicating strong performance in its core Children's Book Publishing and Distribution segment.

Revenue: A Narrow Miss on Sales

In contrast to the earnings beat, the company's revenue story was less robust. Quarterly sales came in at $551.1 million, a modest year-over-year increase of 1.2%. This figure fell short of market expectations, which were set at approximately $567.9 million. The miss, while not drastic, suggests that top-line growth remains a challenge in the current environment, potentially due to timing of book fairs, educational funding cycles, or competitive pressures.

Key Q2 FY2026 Results vs. Estimates:

• Reported Revenue: $551.1 million
  • Vs. Estimate: Miss of ~$16.8 million
• Reported Non-GAAP EPS: $2.57
  • Vs. Estimate: Beat of $0.46 per share

Market Reaction and Capital Allocation Moves

The market's immediate response to this mixed bag was negative. In after-hours trading following the release, SCHL shares were down approximately 2.7%. This reaction suggests investors are prioritizing the revenue miss and the implied growth concerns over the strong bottom-line performance.

A major headline from the earnings announcement was a significant capital return initiative. The company's Board of Directors authorized an expanded share repurchase program of $150 million. This move is framed as an "initial step" to deploy proceeds from recent successful sale-leaseback transactions of certain corporate facilities. This aggressive buyback authorization signals management's confidence in the company's financial stability and its commitment to returning capital to shareholders, potentially aiming to provide a floor for the stock price.

Looking Ahead: Analyst Estimates for Future Quarters

While the press release did not provide specific quantitative forward guidance, analyst estimates for the coming periods offer a benchmark for expectations. The focus for the next quarter, Q3 of fiscal 2026, is notably on profitability during a seasonally lighter sales period.

Current Analyst Consensus for Upcoming Periods:

• Q3 FY2026:
  • Estimated Sales: $354.2 million
  • Estimated EPS: -$0.56 (reflecting typical seasonal loss)
• Full Year FY2026:
  • Estimated Sales: $1.69 billion
  • Estimated EPS: $1.09

Summary of Key Announcements

The fiscal Q2 report from Scholastic can be distilled into three core elements:

1. Strong Profitability: A substantial earnings beat driven by successful global publishing operations.
2. Subdued Revenue Growth: Sales growth that continues to lag behind market expectations.
3. Strategic Capital Return: A major $150 million share repurchase authorization, funded by asset sales, highlighting a focus on shareholder returns.

The divergence between robust earnings and tepid sales growth continues to define Scholastic's financial narrative. The market's negative after-hours reaction indicates that concerns about revenue momentum are currently outweighing the positive signals from EPS performance and the new buyback program. Investors will be watching closely to see if the company can translate its operational efficiency into more consistent top-line expansion in future quarters.

For a detailed history of Scholastic's earnings performance and future analyst estimates, you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.