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Strategies & Market Trends : Value Investing
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From: Paul Senior3/23/2006 1:07:37 PM
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Scholastic: From TheStreet: "Shares of Scholastic (SCHL) slid 7% after the children's book publisher posted weak third-quarter results and slashed its full-year guidance...Scholastic now sees full-year earnings of $1.70 to $1.80 a share, including a one-time severance charge of 15 cents a share. The company now predicts revenue of about $2.3 billion. Previously, the company predicted that earnings would be at the low end of a range of $2.30 to $2.50 a share on revenue of $2.3 billion to $2.4 billion."

Here's a case where I will add more shares. IF the company can be believed, $1.70/sh. would mean a p/e of 15.3. The average p/e over the past ten years for SCHL has not been that low in any year, so IF management can take successful corrective actions, the stock can (maybe) recover.

Of course, SCHL's prediction of $2.30-$2.50 was quite wrong SCHL now tell us, so why should we have much faith in management now with their new $1.70-$1.80 number?

I'll chance it, and add a few shares to a very tiny, but losing, position.
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