Scholastic Corporation Stock Upgraded (SCHL)

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.

NEW YORK ( TheStreet) -- Scholastic Corporation (Nasdaq: SCHL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • SCHL's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 63.41% to $152.30 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.95%.
  • The gross profit margin for SCHOLASTIC CORP is rather high; currently it is at 57.51%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.35% is in-line with the industry average.
  • SCHOLASTIC CORP's earnings per share declined by 5.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SCHOLASTIC CORP reported lower earnings of $1.03 versus $3.35 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $1.03).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Media industry average, but is less than that of the S&P 500. The net income has decreased by 5.7% when compared to the same quarter one year ago, dropping from $61.80 million to $58.30 million.

Scholastic Corporation operates as a children's publishing, education, and media company in the United States and internationally. Scholastic has a market cap of $1.02 billion and is part of the services sector and media industry. Shares are up 14.2% year to date as of the close of trading on Tuesday.

You can view the full Scholastic Ratings Report or get investment ideas from our investment research center.

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