What Happened?
Shares of educational publishing and media company Scholastic (NASDAQ: SCHL) jumped 4.9% in the afternoon session after the company announced the preliminary results of its stock buyback program through a 'modified Dutch auction' tender offer.
The global children's publishing company stated it expected to purchase 2,852,735 shares of its common stock at a price of $40.00 per share. The total cost for the buyback was approximately $114.1 million, which the company planned to fund using cash and its existing credit facility. This action was expected to reduce the total number of outstanding shares by about 13.7%. A reduction in the number of shares can increase earnings per share, which is often viewed favorably by investors as it can enhance shareholder value.
After the initial pop the shares cooled down to $41.30, up 3.9% from previous close.
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What Is The Market Telling Us
Scholastic’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 21.3% on the news that the company reported fourth-quarter financial results that beat Wall Street's expectations and provided strong guidance for the upcoming fiscal year.
The publishing and education company reported fourth-quarter adjusted earnings of 87 cents per share, which surpassed the analyst consensus estimate of 85 cents. Quarterly revenue also exceeded expectations, coming in at $508.3 million against a forecast of $494.58 million, marking a 7% increase from the prior year.
Investors were further encouraged by the company's optimistic forecast for its fiscal year 2026. Scholastic provided guidance for revenue to grow between 2% and 4% and targeted significant growth in Adjusted EBITDA, a measure of operating profitability, to a range of $160 million to $170 million. This positive outlook, combined with the strong quarterly performance, fueled the stock's significant gain.
Scholastic is up 37.9% since the beginning of the year, and at $41.30 per share, has set a new 52-week high. Investors who bought $1,000 worth of Scholastic’s shares 5 years ago would now be looking at an investment worth $1,350.
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