Core Insights - The U.S. education industry is experiencing growth driven by e-books, online learning, demand for healthcare professionals, new technologies, hybrid teaching platforms, and strategic acquisitions [1][2] - Challenges include increased advertising and marketing expenses, costs of online education, and threats from generative AI [1][8] Industry Overview - The Zacks Schools industry consists of for-profit education companies offering various programs in finance, healthcare, technology, and more [3] - Companies also provide child-care services and career-oriented post-secondary courses, including fitness-related programs [3] Trends Impacting the Industry - Rising demand for online education and healthcare professionals is benefiting for-profit education stocks, with companies focusing on innovative teaching platforms [4][5] - Cost-saving efforts, increased technology use, and new program introductions are aimed at boosting profitability [6] - The Federal Reserve's rate increases are making debt offerings more expensive, impacting student loans [7] Competitive Landscape - Generative AI poses a threat to customer growth rates for educational companies, potentially disrupting traditional business models [8] - The industry is facing inflation, stagnant traditional campus enrollment growth, and potential economic slowdowns affecting job availability for graduates [8] Industry Performance - The Zacks Schools industry ranks 56, placing it in the top 22% of over 250 Zacks industries, indicating strong near-term prospects [9][10] - The industry's earnings estimates for 2024 have increased to 1.09, reflecting growing analyst confidence [11] Stock Performance - The Zacks Schools industry has outperformed the broader Zacks Consumer Discretionary sector with a 13.9% increase compared to the sector's 4.7% rise over the past year [13] - The industry is currently trading at a forward P/E ratio of 18.5X, lower than the S&P 500's 20.7X [15] Notable Companies - Stride, Inc. (LRN): Gained 79.5% over the past year, with expected earnings growth of 7.7% for fiscal 2025 [17][18] - Grand Canyon Education, Inc. (LOPE): Stock increased by 21.6% over the past year, with a projected earnings growth of 13.4% for 2024 [19][20] - Lincoln Educational Services Corporation (LINC): Stock rose 33.4% over the past year, with expected earnings growth of 4.1% for 2024 [23][24]
3 Top Schools Stocks Ready to Soar With Industry Growth