Why Scholastic Stock Climbed This Week
Key Points
Real estate sales boosted Scholastic's cash reserves.
Management plans to pass the cash on to stockholders via dividends and repurchases.
Shares of Scholastic (NASDAQ: SCHL) rose this past week after the children's education and media leader's quarterly results earned higher marks than investors expected.
According to data from S&P Global Market Intelligence, Scholastic's stock price was up more than 10%.
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Q3 earnings beat
Scholastic's revenue declined by 2% year over year to $329.1 million in its fiscal 2026 third quarter, which ended on Feb. 28.
The timing of publishing releases led to a 3% decrease in children's book publishing and distribution sales to $197.6 million. Continued funding challenges for school districts drove a 2% decline in education revenue to $56.1 million. These shortfalls were partially offset by a 25% jump in entertainment sales to $16 million.
All told, Scholastic produced an adjusted loss per share of $0.15. That was significantly better than Wall Street expected. Analysts had forecast a per-share loss of $0.37.
Rising capital returns for shareowners
Scholastic has focused on reducing its cost structure to mitigate the effects of sluggish sales. The company raised over $400 million from the sale of its headquarters in New York City and its distribution center in Jefferson City, Missouri.
Scholastic used the proceeds to pay down debt and bolster its cash reserves, while also buying back more than $147 million of its shares. Its board of directors also approved a $200 million tender offer as part of a new $300 million share repurchase program.
These repurchases, along with Scholastic's dividend payments, will be supported by a projected $430 million in full-year free cash flow.
"We remain focused on maximizing shareholder value, disciplined execution, and accelerating profitability, as we position the company for growth in fiscal 2027 and fulfill our mission to help children read, learn, and thrive," CEO Peter Warwick said.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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