Stride Inc (LRN): Is the Enrollment Engine Broken... or Just Jammed?

High Potential Upside + High Floor

With the caveat that I need to do more analysis, here is a walk-through on my investment framework.

• Does the biz have linear, stable, predictable, attractive financials? Absolutely yes.
• I found this company through the screener, screening for steady growth in revenue and earnings, healthy margins, margin improvement, low debt, and attractive valuation.
• Only about 20 companies, out of 5,000, made it through.
• Growth has been tremendous historically but won't be this year - due to a glitch in their software. While this is a major concern, my hope is that they will be able to fix this without having wrecked the market's confidence in them.
• I also wonder about the limits of the growth of the market - how much more runway is there for virtual charter schools?
• Am I capable of understanding the biz? Yes.
• Do I understand the biz extremely well? Not yet. Need to use NotebookLM to do so.
• Can I directionally predict the long-term future of the biz? Yes, I think this won't be overly complex.
• Does the biz have sustainable economic moat? TBD. They presumably have quite a bit of stickiness with districts once they contract with them, as it would seem like the administration of an entire school, including teachers, curriculum, and everything else, would be a difficult thing to transition to a different provider.
• Margin of safety - am I buying at a sufficient discount to FMV? It sure seems like it. At 11x trailing earnings, it sure doesn't seem like I'm overpaying. But this is still TBD.