|
|
|
|
|||||
|
|
|
Chicago, IL – May 23, 2025 – Today, Zacks Equity Research discusses Stride, Inc. LRN, Laureate Education, Inc. LAUR, Perdoceo Education Corp. PRDO, Lincoln Educational Services Corp. LINC and American Public Education, Inc. APEI.
Link: https://www.zacks.com/commentary/2475942/5-leading-school-stocks-to-buy-in-the-evolving-education-market
The Zacks Schools industry is rebounding, fueled by rising demand for career-focused programs in healthcare, skilled trades, cybersecurity, and IT. These institutions are benefiting from a labor market that values job-ready skills and government initiatives promoting non-degree pathways. The sector is also addressing the critical shortage of healthcare workers with rigorous, workforce-aligned training.
Digital innovation is driving differentiation, with companies heavily investing in adaptive learning tools and scalable online platforms. This tech integration enhances engagement and supports flexible learning for working adults, while helping institutions manage costs and protect margins.
Consolidation is also reshaping the landscape, as larger players pursue acquisitions to broaden offerings and improve scale. Although regulatory scrutiny, affordability concerns, and funding dependency remain challenges, demographic tailwinds (especially among older and minority learners), state/federal support for vocational education, and digital innovation are combining to drive enrollment and revenue growth for for-profit providers in 2025 like Stride, Inc., Laureate Education, Inc., Perdoceo Education Corp.,Lincoln Educational Services Corp. and American Public Education, Inc..
The Zacks Schools industry comprises for-profit education companies that offer undergraduate, graduate and specialized programs in finance, accounting, analytics, marketing, healthcare, business and technology. They are engaged in offering career-oriented programs in the fields of business and management, nursing, computer science, engineering, information systems and technology, project management, cybersecurity and criminal justice.
The industry players also offer child-care services and career-oriented post-secondary courses. Some companies within the industry also provide yoga classes and yoga-related retail merchandise-integrated fitness classes, along with conducting workshops and teacher training programs.
Rising Demand for Workforce-Oriented Programs: After years of declining enrollment, 2025 is witnessing renewed interest in programs that offer direct pathways to employment. For-profit institutions have used their flexible operating models to expand offerings in short-term credential programs, healthcare training, cybersecurity, and skilled trades. As the labor market places greater value on job-ready skills over traditional degrees, these programs are gaining traction, especially among adult learners and career switchers.
Government workforce development initiatives, such as reskilling grants and federal partnerships to promote non-degree pathways, have also boosted demand. Additionally, the ongoing digital transformation across sectors has spurred interest in IT boot camps and tech-aligned certifications, areas where for-profit providers have built a scalable presence.
Meanwhile, healthcare and global institutions have been making substantial contributions to the companies' financial success. The U.S. healthcare sector is presently grappling with a pronounced shortage of skilled professionals, which is posing a significant risk to the quality of care and exacerbating health disparities across the country. The companies have designed their programs to be rigorous and well-suited to address the workforce needs of the healthcare industry. Industry stakeholders also anticipate a future where the demand for healthcare professionals will outstrip the available supply.
Amid the pressures of regulation and shifting demographics, the sector is witnessing consolidation. Larger, better-capitalized players are acquiring niche or financially weaker institutions to expand program offerings or gain regional accreditation. Strategic Education's acquisition of tech bootcamps and Adtalem's continued integration of Walden University highlight ongoing M&A activity aimed at diversification and scale. Private equity interest in edtech and career-aligned training platforms also signals long-term confidence in segments of the for-profit education market that can prove ROI for students and employers alike.
Online Education and Tech Integration Drive Market Differentiation: The acceleration of digital learning continues to be a critical differentiator for for-profit colleges. Institutions like Grand Canyon Education (LOPE), Strategic Education (STRA), and Adtalem Global Education (ATGE) have invested heavily in learning management systems, data analytics, and adaptive learning tools to personalize instruction and enhance student engagement.
The shift toward hybrid and asynchronous formats has allowed for-profit players to serve non-traditional and working students more effectively than many public institutions. Scalable digital platforms have also helped manage operating costs, enabling some companies to maintain or improve margins despite enrollment challenges.
Affordability, Operational & Financial Challenges: Affordability remains a core concern for prospective students, especially with interest in student loan reform gaining momentum. While income-driven repayment plans and forgiveness initiatives may ease financial stress for borrowers, they also highlight systemic cost concerns associated with for-profit programs.
For-profit educators face several operational and financial headwinds. Most of their revenues come from tuition and federal aid, so they are vulnerable to any enrollment swings or cuts in government funding. Any dip in student numbers (due to competition, demographic trends or economic cycles) can quickly hit operating income.
Compliance and administrative costs are also high, as schools must meet strict reporting and quality standards under Title IV. Industry players also often spend heavily on recruitment and advertising to attract students, squeezing margins. Again, macroeconomic factors (like rising interest rates or budget cuts at the state/local level) can constrain school and district purchasing of edtech products, indirectly pressuring vendors' top lines.
The Zacks Schools industry is a 16-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #30, which places it in the top 12% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates impressive near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's positioning in the top 50% of the Zacks-ranked industries is a result of a higher earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group's earnings growth potential. Since April 2025, the industry's earnings estimates for 2025 have increased to $1.38 per share from $1.37.
Before we present a few stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock-market performance and valuation picture.
The Zacks Schools industry has lagged the broader Zacks Consumer Discretionary sector and the Zacks S&P 500 Composite over the past year.
The stocks in this industry have collectively gained 6.9% compared with the broader sector's rise of 21.6%. Meanwhile, the S&P 500 has increased 12.5% in the said period.
On the basis of the forward 12-month price-to-earnings ratio, which is a commonly used multiple for valuing for-profit education stocks, the industry is currently trading at 16.86X versus the S&P 500's 21.81X and the sector's 19.73X.
Over the past five years, the industry has traded as high as 286.8X, as low as 13.01X and at a median of 21.48X.
Below, we have discussed five stocks from the industry that currently sport a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have solid growth potential. You can see the complete list of today's Zacks #1 Rank stocks here.
Stride: Headquartered in Reston, VA, Stride is a technology-driven education services provider with a well-diversified portfolio of learning programs. The company is strategically positioned to meet its objectives through its emphasis on advanced software solutions, curriculum innovation, and broad program offerings.
With the U.S. education landscape increasingly favoring online learning and career-focused education, Stride stands to benefit significantly. This shift aligns well with its core strengths. During the first nine months of fiscal 2025,
Stride reported strong enrollment growth—up 12.8% year over year to 137,500 students in General Education and a notable 32% increase to 96,000 students in its Career Learning segment, translating to an overall 20% rise in total enrollment. Stride's targeted investments in school-as-a-service initiatives, personalized learning experiences, and enhanced product usability are expected to support sustained momentum, even amid broader macroeconomic uncertainties.
Stride stock — currently sporting a Zacks Rank #1 — has surged 118.1% over the past year. LRN has seen an upward estimate revision for fiscal 2025 earnings to $7.09 per share from $6.67 over the past 30 days. This company's earnings for fiscal 2025 are expected to register 51.2% growth from a year ago. LRN's earnings topped consensus estimates in three of the trailing four quarters and missed in one, with the average surprise being 94.7%. Moreover, LRN's three-to-five-year expected earnings per share growth rate is currently pegged at 20%.
American Public Education: This Charles Town, WV, American Public Education provides online and campus-based postsecondary education and career learning in the United States. The company has been gaining from strong enrollment growth across its major education segments. A pivotal contributor to profitability was the turnaround at Rasmussen, given improved operational leverage resulting from stronger enrollments flowing through a largely fixed cost structure.
Management emphasized its strategy of optimizing program mix and maximizing campus utilization ("filling the back row") as key levers to further margin expansion. The company's broader strategy to consolidate APUS, Rasmussen, and Hondros into a single institution under APUS branding is also expected to drive future synergies.
APEI's continued focus on military and veteran students through APUS—66% of whom are active-duty or reserve members—also provided a stable and loyal enrollment base. Despite a temporary Air Force tuition assistance portal outage, APUS teams successfully mitigated its impact on registrations.
American Public Education, carrying a Zacks Rank #2, has seen an upward estimate revision for 2025 earnings to $1.38 per share from $1.27 over the past 30 days. The stock has soared 60.2% over the past year. This company's earnings for 2025 are expected to grow 150.9%. Its earnings topped consensus estimates in each of the trailing four quarters, with the average surprise being 122.5%. It also has a favorable VGM Score of A, making it a potentially interesting investment opportunity.
Laureate Education: Headquartered in Miami, FL, this company operates five higher education institutions across Mexico and Peru. Laureate Education has been capitalizing on its strength in its locally anchored yet digitally scalable business model, resilient demand in key Latin American markets, and strategic focus on affordability and employability, solidifying its foundation for continued growth in 2025.
Notable contributor to growth was the accelerating momentum of digital education. Fully online programs now account for about 20% of the student base and are growing at three to four times the pace of face-to-face programs. This digital expansion is particularly strong in Mexico and gaining traction in Peru, positioning Laureate to capitalize on secular demand shifts toward flexible, workforce-aligned education.
Laureate Education stock — currently carrying a Zacks Rank #2 — has rallied 36.3% over the past year. LAUR has seen an upward estimate revision for 2025 earnings to $1.67 per share from $1.58 over the past 60 days. This company's earnings for 2025 are expected to register 23.7% growth from a year ago.
Perdoceo Education: Headquartered in Schaumburg, IL, this company offers postsecondary education programs through online, campus-based and blended learning formats across the United States. It has been benefiting from organic enrollment gains, sustained student retention, and the accretive impact of the St. Augustine acquisition.
A key growth engine of Perdoceo was Colorado Technical University ("CTU"), where total enrollments rose 10.6% in the first quarter of 2025, driven by robust student engagement, high retention, and increased prospective student interest, especially within the expanding corporate student programs.
Overall, continued strength in CTU, margin improvements at AIU and acquisition along with investments in technology, data analytics, and student support systems, are expected to further enhance academic outcomes and institutional performance. Perdoceo's proactive capital allocation—returning more than $34 million to shareholders in the quarter through dividends and buybacks—underscores its financial discipline and confidence in sustainable growth.
Perdoceo, carrying a Zacks Rank #2, has soared 35.1% over the past year. It has seen an upward estimate revision for the 2025 earnings estimate to $2.49 per share from $2.41 over the past 30 days. This company's earnings for 2025 are expected to grow 8.7%. Its earnings topped consensus estimates in each of the trailing four quarters, with the average surprise being 6.3%. It also has a favorable VGM Score of A.
Lincoln Educational Services: Based in Parsippany, NJ, Lincoln has been benefiting from a combination of strong enrollment growth, strategic campus expansions, and operational efficiencies stemming from its hybrid education model, Lincoln 10.0. This model, which blends hands-on campus-based learning with online coursework, continued to generate academic and operational benefits, enabling greater scheduling flexibility, improved student retention, and enhanced cost efficiencies.
These efficiencies contributed to a reduction in education and facility costs as a percentage of revenue and a 20% year-over-year decline in marketing cost per student, starting in the first quarter of 2025. Lincoln's expansion strategy has also been playing a vital role in its growth trajectory. The new East Point campus in Atlanta, which opened in early 2024, has already turned profitable. Amid rising national attention on the skilled trades and growing demand for non-traditional education pathways, Lincoln is well positioned to meet workforce development needs.
Lincoln, carrying a Zacks Rank #2, has surged 82.4% over the past year. It has seen an upward estimate revision for the 2025 earnings estimate to 72 cents per share from 68 cents over the past 30 days. LINC's earnings for 2025 are expected to grow 28.6%. Its earnings topped consensus estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 217.8%.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).
| 6 hours | |
| 9 hours | |
| 9 hours | |
| 10 hours | |
| 10 hours | |
| 11 hours | |
| 18 hours | |
| May-22 | |
| May-22 | |
| May-22 | |
| May-22 | |
| May-22 | |
| May-21 | |
| May-21 | |
| May-21 |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite