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Why Barnes & Noble Education Stock Gained 42.6% in January

Keith Noonan, The Motley Fool

What happened

Shares of Barnes & Noble Education (NYSE: BNED) gained 42.6% in January, according to data from S&P Global Market Intelligence . The company's stock fell roughly 28% from October through December, as sell-offs for the broader market and second-quarter results that fell short of expectations put pressure on its valuation, but it came roaring back in January.

BNED Chart

BNED data by YCharts .

A rebound for the broader stock market, support from institutional investors, and some favorable ratings coverage appear to have been the driving factors between the small-cap education technology company's big gains last month.

An illustration of people, a laptop, books, and other supplies.

Image source: Getty Images.

So what

Barnes & Noble Education has a market capitalization of roughly $285 million as of this writing As a small-cap stock, shares are prone to posting big swings on relatively little news or in line with momentum for the broader market. Sidoti Research published a note on Jan. 21 raising its rating on the stock from neutral to buy, and filings showing that Jefferies and BlackRock both increased their holdings in the company could have been a positive catalyst for the stock.

Now what

Barnes & Noble Education stock has continued to climb in February, with shares trading up roughly 3.9% in the month so far.

BNED Chart

BNED data by YCharts .

Shares trade at roughly 10.5 times this year's expected earnings and roughly 0.14 times expected sales. The company is pushing ahead with its continued transition to a more digitally focused business to offset declines in other segments, aiming to improve sales efficiencies, and manage operating costs across the business. Its digital student solutions business currently accounts for roughly 1% of sales and 5% of adjusted EBITDA, but management expects that the segment's sales contribution will rise to 5% and its adjusted EBITDA contribution will be roughly 25% in 2021.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Jefferies Financial Group Inc. The Motley Fool has a disclosure policy .