Stride vs. Grand Canyon: Which Online Colleges Stock is a Better Buy?
This Virginia-based education company, with a market cap of about $6.03 billion, is witnessing record enrollment growth trends, driven by demand strength for online full-time K-12 programs and career education. This, coupled with ongoing regulatory reform trends and its strategic business initiatives, is catalyzing the growth prospects. The demand patterns of students and parents shifting toward tech-based alternatives and career-focused programs are fueling its upcoming prospects, especially now when LRN is mainly focused on enhancing its career education offerings.Undoubtedly, the company's focal shift is paying off, offering it revenue visibility and profitability prospects in the upcoming period. The robust market trends for career-focused and tech-based alternatives, alongside its diversified career-focused offerings, resulted in 32% year-over-year enrollment growth in Stride's Career Learning segment during the first nine months of fiscal 2025. Moreover, during the same time frame, total enrollment grew 20% year over year. With the ongoing regulatory reform trends in the United States education industry, the demand for online full-time K-12 programs and career education is robust, proving incremental for Stride's fiscal 2026 outlook and long-term prospects.Owing to robust trends, the company raised its fiscal 2025 revenue guidance to $2.37-$2.385 billion, reflecting 16.2-16.9% year-over-year growth. This complements its current focus on reaching fiscal 2028 targets, highlighting revenues growing in the range of $2.70-$3.30 billion, reflecting a 10% compound annual growth rate (CAGR) from fiscal 2023.LRN's strategic investments focusing on school-as-a-service offerings, a personalized learning model and improving user experience of its products position it well to witness such trends in the upcoming period, despite the ongoing macro uncertainties and inflationary pressures.
This Arizona-based educational technology company, having a market cap of about $5.2 billion, is gaining from its diversified university partnerships, workforce development programs and tech-based offerings. The market's shift toward online education alternatives and career-enhancing programs is also proving favorable for LOPE. The company is consistently seeking to grab onto opportunities that align with developing workforce programs and capitalize on them to elevate its revenue visibility and profitability prospects. As of March 31, 2025, Grand Canyon Education offered education services to 22 university partners across the United States. During the first quarter of 2025, enrollments at the Grand Canyon University grew 5.8% year over year to 123,773, with enrollments from university partners at LOPE's off-campus classroom and laboratory sites (or hybrid campus) increasing 12.1%. Grand Canyon Education, along with its 22 partner institutions, is making notable investments to align its programs with the workforce requirements in the market. Since January 2023, LOPE has rolled out 48 new programs, aiming to launch more than 20 programs annually. The programs align with high-demand fields, including education, healthcare, public safety, manufacturing and engineering and tech, ensuring that the students are able to capture the labor market opportunities. Moreover, the company continues to work with employers directly to address their workforce shortages.Owing to the favorable market trends and its strategic in-house initiatives, LOPE laid out an upbeat 2025 outlook. For the year, it expects service revenues to be between $1,079.8 million and $1,099.8 million, up 4.5-6.5% year over year. Operating margin is expected to be between 27.3% and 28%, up from 26.7% reported a year ago. Moreover, earnings per share (EPS) are expected between $8.36 and $8.70, up 8.2-12.5% from $7.73 reported in 2024.
As witnessed from the chart below, year to date, Stride's share price performance stands above Grand Canyon Education.
Image Source: Zacks Investment Research
Considering valuation, over the last five years, Stride is trading below Grand Canyon Education on a forward 12-month price-to-sales (P/S) ratio basis. The undervaluation of LRN compared with LOPE advocates for a comparatively attractive entry point for investors in favor of the former.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LRN's fiscal 2025 EPS indicates 51.2% year-over-year growth, while the fiscal 2026 estimate indicates an increase of 9.4%. The fiscal 2025 and 2026 EPS estimates have remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LOPE's 2025 and 2026 earnings estimates have remained unchanged over the past 60 days. However, the estimated figures of 2025 and 2026 reflect 8.8% and 10.5% year-over-year growth, respectively.
Image Source: Zacks Investment Research
Grand Canyon Education's trailing 12-month ROE of 30.9% significantly exceeds Stride' average of 23.4%, underscoring its efficiency in generating shareholder returns.
Image Source: Zacks Investment Research
Both Stride and Grand Canyon Education offer compelling exposure to the growing online education market, backed by solid earnings profiles and favorable Zacks Ranks. However, Stride stands out as the stronger investment case today. It not only boasts superior near-term earnings growth estimates but also trades at a more attractive valuation. While LOPE offers impressive ROE and operational stability, its premium valuation and slower growth trajectory make it less appealing from a risk-reward standpoint at current levels.Although both stocks currently carry a Zacks Rank #3 (Hold), given LRN's combination of growth momentum, stable EPS projections and discounted valuation, investors seeking higher upside in 2025 may find Stride the more promising pick in the online education space. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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