Value
6.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 7.1 |
| P/S | 10.0 |
| EV/EBITDA | 3.7 |
| Fwd P/E | 7.1 |
| PEG | 4.5 |
- ▸Forward P/E: 17.7x
- ▸PEG: 2.03
SCHL · Why this verdict
Why Scholastic (SCHL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Scholastic's earnings beat streak and imminent catalyst are offset by declining revenue, an elevated growth-adjusted valuation, and a notably negative risk-adjusted asymmetry ratio, consistent with a call to consider reducing the position.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Scholastic has beaten consensus EPS in 3 of its last 4 quarters, with an earnings catalyst in 19 days built on that beat streak. Edge rationale | The company should beat consensus again in its upcoming report on 2026-07-23. | →Stable |
| CounterRevenue is declining roughly 2% year over year, which could make it harder to sustain the beat streak on the top line even if EPS beats continue. | ||
Scholastic's revenue is declining roughly 2% year over year. Growth breakdown | Revenue growth should turn flat-to-positive within the next two reported quarters. | Tripped→Stable |
| CounterA modest 2% revenue decline is within normal variation for a seasonal publishing business and may not indicate a structural growth problem. | ||
Scholastic trades at a forward P/E of 17.4x with a PEG ratio of 1.61, a valuation that looks stretched given the declining revenue backdrop. Valuation breakdown | The PEG ratio should compress back toward 1.0 as either the multiple falls or growth accelerates. | →Stable |
| CounterExcellent cash conversion of 185% FCF/NI and a strong Piotroski F-Score of 7 out of 9 suggest underlying financial strength that could justify a premium multiple despite the higher PEG. | ||
The risk-adjusted asymmetry ratio is negative at -2.16, with the analyst target already reached and -24.9% implied upside against 11.5% downside, explaining the reduce-position stance. Warnings | The asymmetry ratio should turn positive as either price consolidates lower or analyst targets are revised upward. | ↑Improving |
| CounterHigh short interest of 21% combined with an upcoming earnings beat catalyst could trigger a short squeeze that outpaces the negative fundamental asymmetry. | ||
Scholastic has beaten consensus EPS in 3 of its last 4 quarters, with an earnings catalyst in 19 days built on that beat streak.
→StableEdge rationale
- Expectation
- The company should beat consensus again in its upcoming report on 2026-07-23.
CounterRevenue is declining roughly 2% year over year, which could make it harder to sustain the beat streak on the top line even if EPS beats continue.
Scholastic's revenue is declining roughly 2% year over year.
Tripped→StableGrowth breakdown
- Expectation
- Revenue growth should turn flat-to-positive within the next two reported quarters.
CounterA modest 2% revenue decline is within normal variation for a seasonal publishing business and may not indicate a structural growth problem.
Scholastic trades at a forward P/E of 17.4x with a PEG ratio of 1.61, a valuation that looks stretched given the declining revenue backdrop.
→StableValuation breakdown
- Expectation
- The PEG ratio should compress back toward 1.0 as either the multiple falls or growth accelerates.
CounterExcellent cash conversion of 185% FCF/NI and a strong Piotroski F-Score of 7 out of 9 suggest underlying financial strength that could justify a premium multiple despite the higher PEG.
The risk-adjusted asymmetry ratio is negative at -2.16, with the analyst target already reached and -24.9% implied upside against 11.5% downside, explaining the reduce-position stance.
↑ImprovingWarnings
- Expectation
- The asymmetry ratio should turn positive as either price consolidates lower or analyst targets are revised upward.
CounterHigh short interest of 21% combined with an upcoming earnings beat catalyst could trigger a short squeeze that outpaces the negative fundamental asymmetry.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.2 |
| ROA | 0.9 |
| Gross margin | 7.3 |
| Op margin | 5.7 |
| Net margin | 1.8 |
| Current ratio | 4.7 |
| FCF quality | 7.0 |
| Moat | 5.4 |
| Piotroski F | 4.4 |
- ▸No competitive moat
Growth
0.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.9 |
| EPS growth | 0.0 |
- ▸Declining revenue: -6%
Momentum
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.8 |
| MACD | 0.7 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 3.3 |
- ▸Uptrend pullback (RSI 37) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.2 |
| erm sentiment | 5.0 |
Insider
5.6/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 8.7 |
| notable moves | 3.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.3 |
| quality rank | 1.7 |
| growth rank | 1.7 |
Technical
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.0 |
| support resistance | 8.1 |
| 52w position | 7.2 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.2 |
| days to cover | 6.0 |
| volatility | 0.0 |
| put call | 8.0 |
| implied vol | 4.7 |
| beta | 6.9 |
| debt equity | 7.6 |
- ▸High short interest: 16%
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 7.5 |
- ▸Strong earnings: 3B/1M
- ▸Dividend aristocrat: 2.4% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.2>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:37d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.3=NEGATIVE
Warning (1)
- MOMENTUM:5.2<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.31
Upside
-13.6%
Downside
10.4%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.8B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.3=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.31 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.4, Catalyst at 6.8, and Value at 6.3; the weakest are Growth at 0.5, Peer rank at 3.7, and Quality at 4.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.31 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Catalyst With Beat Streak
Trip ifScholastic's EPS surprise falls below 0% in the report on 2026-07-23.
- P2Declining RevenueTripped
Trip ifRevenue growth falls below -8% YoY in a subsequent quarter.
- P3Elevated Valuation Vs Growth
Trip ifPEG ratio rises above 2.5 without a corresponding change in the growth outlook.
- P4Negative Asymmetry Caps Add
Trip ifThe risk-adjusted asymmetry ratio stays below -1.5 for 2 consecutive quarters.