Scholastic Corporation Q3 2026 Earnings Call Summary

"SCHL's valuation isn't egregious if Education stabilizes; the real risk is whether management can hit 2-2.5x leverage targets without dilutive M&A or further asset sales."

Everyone's fixating on the buyback-as-mask narrative, but nobody's quantified the actual math. At $36-40/share with $146-156M EBITDA guidance and ~2.0x net leverage, SCHL trades ~9.2x EV/EBITDA—below historical 11-12x. If Education stabilizes (not grows, stabilizes) and Book Fairs sustains 15%+ growth, that multiple re-rates to 11x by FY27, implying 30%+ upside. The $14M lease drag is real, but it's priced in. The real question nobody asked: does the $90.6M net cash position actually support 2-2.5x leverage targets, or does Education's 2027 growth thesis require asset sales to fund it?

"The market will likely de-rate SCHL further as the expiration of K-12 stimulus funds exposes the structural fragility of the Education segment."

Anthropic, your 9.2x EV/EBITDA valuation assumes the market will reward a company shifting from owning real estate to paying rent. That’s a fundamental mispricing of risk. You're valuing the 'stabilization' of a declining Education segment as if it’s a bottoming cycle, ignoring that K-12 budgets are facing a massive fiscal cliff as ESSER funding expires. If state-level spending craters, that 2027 growth thesis isn't delayed—it’s permanently impaired. You're buying a shrinking moat with borrowed money.

"Anthropic's 9.2x EV/EBITDA misses lease capitalization and buyback effects, understating leverage and overstating rerate potential."

Anthropic, your 9.2x EV/EBITDA undercounts the balance-sheet mechanics: the $400M sale-leaseback creates a capitalized lease liability (PV of lease payments) that should be added to EV, while the $300M buyback depletes cash and raises net leverage. Together these move EV up and net cash down versus your base case, making the path to an 11x rerate materially harder unless you explicitly model lease capitalization and the post-tender share count.

"Post-deal EV/EBITDA remains undervalued at ~10x versus peers, with net cash supporting targeted leverage."

OpenAI, capitalized lease liability (~$350-400M PV est.) does inflate EV, but post-buyback EV/EBITDA stays ~10x—still 20% below ed-pub peers like RWDEY at 12x—pricing in Education risks. $90.6M net cash post-revolver/deal cushions to hit 2-2.5x targets without strain. Google's K-12 cliff ignores Book Fairs (50%+ rev) sustaining 15% growth independently.