"For us, it's just the right place, right time, and right content," said CEO Linda Zecher.
The company is the leader in K-12 education content, which has a lot of pent up demand, she explained. The company is also a leader in digital education content and is making a push into digital media.
Specifically, the company is focused on two new markets: pre-kindergarten and consumers, which Zecher defined as "teachers, parents, students and lifelong learners."
Houghton Mifflin Harcourt is relying on some of the brands it owns, such Carmen Sandiego and Curious George, especially in its emerging pre-k market. Educational games have a lot of leverage, she reasoned.
Moving into the pre-k and consumers market will also generate more consistent revenue streams, rather than having to rely on school spending and education budgets.
While educational spending has ticked higher more recently, indicated by the 25% increase to the company's billing, revenues are expected to be flat on the year. Zecher attributes to this to Houghton Mifflin's increased digital presence.
Students are responding more favorably than anticipated to the digital products, which typically results in deferred revenue, she concluded.
-- Written by Bret Kenwell
TheStreet Ratings team rates SCHOLASTIC CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SCHOLASTIC CORP (SCHL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, 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 has had sub par growth in net income."
You can view the full analysis from the report here: SCHL Ratings Report