Scholastic (NASDAQ:SCHL) Reports Sales Below Analyst Estimates In Q2 CY2026 Earnings, Stock Drops

Barchart·07/23/2026 15:30:10

Educational publishing and media company Scholastic (NASDAQ:SCHL) fell short of the market’s revenue expectations in Q2 CY2026, with sales falling 6.3% year on year to $476.1 million. Its non-GAAP profit of $2.19 per share was 1.4% above analysts’ consensus estimates.

Is now the time to buy Scholastic? Find out by accessing our full research report, it’s free.

Peter Warwick, President and Chief Executive Officer, said, "Fiscal 2026 demonstrated the earnings power of a more focused Scholastic, as the Company made substantial progress in a multi-year transformation of its governance, organization, strategy and balance sheet. Adjusted EBITDA rose, in line with guidance, positioning the Company for growth in fiscal 2027."

Company Overview

Creator of the legendary Scholastic Book Fair, Scholastic (NASDAQ:SCHL) is an international company specializing in children's publishing, education, and media services.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Scholastic grew its sales at a weak 4% compounded annual growth rate. This was below our standard for the consumer discretionary sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Scholastic’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, Scholastic missed Wall Street’s estimates and reported a rather uninspiring 6.3% year-on-year revenue decline, generating $476.1 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 6.6% over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention.

AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.

Operating Margin

Scholastic’s operating margin has generally stayed the same over the last 12 months, and we generally like to see margin increases due to economies of scale and cost efficiency over time.

This quarter, Scholastic generated an operating margin profit margin of 10.8%, down 1.8 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Scholastic has shown poor cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 14.5%, below what we’d expect for a consumer discretionary business.

Scholastic’s free cash flow clocked in at $70 million in Q2, equivalent to a 14.7% margin. The company’s cash profitability regressed as it was 2.3 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

Key Takeaways from Scholastic’s Q2 Results

It was encouraging to see Scholastic beat analysts’ EBITDA expectations this quarter. On the other hand, its full-year EBITDA guidance missed and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 6.6% to $43.37 immediately after reporting.

Scholastic may have had a tough quarter, but does that actually create an opportunity to invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).

This article contains syndicated content. We have not reviewed, approved, or endorsed the content, and may receive compensation for placement of the content on this site. For more information please view the Barchart Disclosure Policy here.