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Bull of the Day: Scholastic (SCHL)

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The top stocks are often found in the top industries. What I mean by that is, if there are tailwinds for a particular industry as a whole, it makes life much easier for the individual stocks in those industries. Think of it as the tide that raises all the ships. Today’s Bull of the Day is a top stock inside of a top industry. I’m talking about Zacks Rank #1 (Strong Buy) Scholastic (SCHL - Free Report) .

The Publishing – Books industry ranks in the Top 1% of our Zacks Industry Rank. Overall, it’s number 2 out of all 255 industries we rank. Scholastic publishes and distributes children's books worldwide. It operates in three segments: Children's Book Publishing and Distribution, Education, and International. The Children's Book Publishing and Distribution segment publishes and distributes children's books, e-books, media, and interactive products through its school book club and school book fair channels, as well as through its trade channel. Its original publications include Harry Potter, The Hunger Games, The 39 Clues, Spirit Animals, The Magic School Bus, I Spy, Captain Underpants, Dog Man, Goosebumps, and Clifford The Big Red Dog; and licensed properties comprise Star Wars, Lego, Pokemon, and Geronimo Stilton. 

There is a big reason for the favorable Zacks Rank. That’s the big jump in earnings estimates for next year. Over the last sixty days, an analyst has revised their earnings number to the upside by a significant margin. This push higher has increased the current year Zacks Consensus Estimate from 89 cents to $1.29. That’s a 45% increase and would represent year-over-year EPS growth of 19.4%. Next year’s consensus estimate is currently reflecting EPS growth of 13.18%.

Shares of SCHL came under pressure earlier this year, eventually bottoming out near $32 per share in late May. Since then, the stock has staged a dramatic comeback. A solid earnings surprise took shares over $41 temporarily before settling back under $40. The post-earnings spike put the punctuation point on a move that saw the stock leapfrog the all-important 200-day moving average. The long-term bullish trend is back on, and with positive revisions providing a tailwind, SCHL are looking to head higher.

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