5 Leading School Stocks to Buy in the Evolving Education Market

Industry Overview - The Zacks Schools industry is experiencing a rebound driven by increased demand for career-focused programs in healthcare, skilled trades, cybersecurity, and IT, supported by a labor market that values job-ready skills and government initiatives promoting non-degree pathways [1][4] - The industry is addressing the critical shortage of healthcare workers through rigorous, workforce-aligned training programs [5] Trends Influencing the Industry - Digital innovation is a key driver of differentiation, with companies investing in adaptive learning tools and scalable online platforms to enhance engagement and support flexible learning for working adults [2][7] - There is a rising demand for workforce-oriented programs, particularly among adult learners and career switchers, as the labor market increasingly values job-ready skills over traditional degrees [4] - The sector is witnessing consolidation, with larger players acquiring niche or financially weaker institutions to expand offerings and improve scale [6] Financial Performance and Market Position - The Zacks Schools industry currently ranks 30 within the broader Zacks Consumer Discretionary sector, 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 to $1.38 per share from $1.37 since April 2025, reflecting growing analyst confidence in the group's earnings growth potential [12] Enrollment and Revenue Growth - For-profit providers are expected to see enrollment and revenue growth in 2025, driven by demographic tailwinds, state and federal support for vocational education, and digital innovation [2] - Companies like Stride, Inc., Laureate Education, Inc., and American Public Education, Inc. are positioned to benefit from these trends, with significant enrollment growth reported [21][29][25] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings ratio of 16.86X, compared to the S&P 500's 21.81X and the sector's 19.73X, indicating potential undervaluation [17][20] Company Highlights - Stride, Inc. reported a 20% rise in total enrollment, with a 12.8% increase in General Education and a 32% increase in Career Learning [21] - American Public Education has seen a 60.2% stock increase over the past year, with earnings expected to grow 150.9% in 2025 [25] - Laureate Education's fully online programs account for about 20% of its student base, growing at three to four times the pace of face-to-face programs [28] - Perdoceo Education has benefited from a 10.6% enrollment increase at Colorado Technical University, driven by strong student engagement [32] - Lincoln Educational Services has achieved an 82.4% stock increase over the past year, supported by strong enrollment growth and operational efficiencies [36]