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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.  TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock.  Click here to learn more.

NEW YORK (TheStreet) -- Scholastic (SCHL) - Get Scholastic Corporation Report has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of A-.  TheStreet Ratings Team has this to say about their recommendation:

"We rate SCHOLASTIC CORP (SCHL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SCHOLASTIC CORP has improved earnings per share by 14.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SCHOLASTIC CORP increased its bottom line by earning $1.34 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $1.34).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 6.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SCHL's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that SCHL's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for SCHOLASTIC CORP is rather high; currently it is at 56.63%. Regardless of SCHL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.29% trails the industry average.
  • You can view the full analysis from the report here: SCHL Ratings Report

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