4 Top School Stocks in a Promising Education Landscape

Core Insights - The U.S. education sector is experiencing diverse growth driven by e-books, online learning platforms, demand for healthcare professionals, technology advancements, hybrid teaching models, and strategic acquisitions for global expansion [1][4] - Despite growth opportunities, companies in the Zacks Schools industry face challenges such as rising advertising costs, online education expenses, and competition from generative AI [1][8] Industry Overview - The Zacks Schools industry includes for-profit education companies offering undergraduate, graduate, and specialized programs in various fields such as finance, healthcare, and technology [3] - Companies also provide child-care services and career-oriented post-secondary courses, with some offering yoga classes and related merchandise [3] Trends Impacting the Industry - There is a rising demand for online education and healthcare professionals, with for-profit education companies adapting to virtual delivery methods and focusing on non-traditional education models [4][5] - Companies are implementing cost-saving measures, increasing technology use, and introducing new programs to enhance profitability and student outcomes [6] Financial Performance and Valuation - The Zacks Schools industry has a Zacks Industry Rank of 29, placing it in the top 12% of over 250 Zacks industries, indicating strong near-term prospects [10][11] - The industry's earnings estimates for 2025 have increased from $1.55 to$1.75 per share, reflecting growing analyst confidence [12] Stock Performance - Over the past year, the Zacks Schools industry has gained 1.8%, underperforming the broader Zacks Consumer Discretionary sector's 13% rise and the S&P 500's 19.6% increase [14] - The industry is currently trading at a forward P/E ratio of 16.2X, lower than the S&P 500's 22.2X and the sector's 18.9X [16] Notable Companies - Adtalem Global Education Inc. (ATGE): Achieved a 10% increase in enrollment and a 105.7% stock surge over the past year, with earnings for fiscal 2025 expected to grow by 23.8% [19][20] - Laureate Education, Inc. (LAUR): Maintained its position as the largest higher education provider in Mexico and Peru, with a stock increase of 49.6% and expected earnings growth of 11.9% for 2025 [23][24] - Perdoceo Education Corporation (PRDO): Benefiting from improved enrollment trends and a 46% stock increase, with earnings for 2025 expected to grow by 5.2% [25][26] - Strategic Education, Inc. (STRA): Focused on competency-based learning models, with a stock increase of 6.1% and expected earnings growth of 17.6% for 2025 [27][28]