Despite these challenges, the industry's medium-term outlook remains favorable. Persistent shortages of healthcare professionals and skilled-trade workers continue to drive demand for career-focused education, supporting enrollment growth and stronger employer partnerships. Demand for flexible online, hybrid and short-duration credential programs is expanding as working adults seek affordable pathways to upgrade their skills. Employer-sponsored education initiatives are improving enrollment visibility and career outcomes, while artificial intelligence and digital learning technologies are helping institutions enhance student engagement, retention and operating efficiency, supporting sustainable long-term growth. Companies like Perdoceo Education Corporation PRDO, Lincoln Educational Services Corporation (LINC and American Public Education, Inc. APEI are gaining from these trends.
Industry Description
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.
4 Trends Shaping the Future of the Schools Industry
Regulatory Scrutiny and Funding Uncertainty Remain Risks: Regulatory oversight remains a key headwind for the U.S. for-profit education industry in 2026. Institutions continue to operate under evolving federal and state regulations, accreditation standards and financial-aid requirements, making expansion, new program launches and enrollment growth subject to lengthy approval processes. The Financial Value Transparency and Gainful Employment framework has increased reporting obligations and outcomes-based accountability, placing greater pressure on providers to demonstrate strong graduate earnings, completion rates and loan-repayment performance. Programs with weak outcomes risk heightened scrutiny and potential restrictions on access to federal student aid. Operators must also invest more in compliance systems, student support and career services, increasing operating costs and weighing on margins. Policy changes across administrations and uncertainty surrounding government funding and student-aid programs complicate long-term planning. As a result, regulation remains a structural industry headwind despite a somewhat more supportive policy environment.
Rising Costs and Uneven Enrollment Pressure Margins: Strong demand in selected career fields does not eliminate the industry’s financial pressures. Student interest remains uneven, with healthcare, skilled trades and employer-affiliated programs generally outperforming some traditional and general education offerings. This shift requires schools to continually adjust their program portfolios and marketing strategies. Competition for qualified applicants is also raising spending on advertising, scholarships, admissions teams and student support. Meanwhile, healthcare and technical programs require substantial upfront investment in faculty, laboratories, equipment, facilities, technology systems and clinical partnerships before enrollment generates meaningful revenues. Instructor shortages and limited clinical placement capacity can further restrict growth. Technology upgrades may eventually improve efficiency, but implementation expenses and platform disruptions can weigh on near-term margins and student retention. Inflation in wages, rent and educational supplies adds further pressure, particularly for institutions undertaking campus or program expansion.
Healthcare and Skilled-Trade Shortages Support Demand: Persistent workforce shortages are expected to remain a major growth driver for the U.S. Schools and Education industry in 2026. Healthcare providers continue to need nurses, medical technicians, imaging professionals, therapists and other clinical workers as the population ages, healthcare utilization rises, and experienced employees retire. At the same time, employers face shortages in electrical, HVAC, welding, automotive and other technical occupations. Strong wages and clear employment pathways are encouraging students to choose career-focused education over broader degree programs with less certain outcomes. Concerns about artificial intelligence disrupting some entry-level white-collar roles are also increasing interest in hands-on professions that are difficult to automate. Consequently, institutions offering healthcare, skilled-trade and vocational programs should benefit from healthy enrollment pipelines, program expansion and stronger employer partnerships.
Flexible Learning and Employer Partnerships Drive Growth: Demand for flexible and affordable education is another major tailwind for the industry. Working adults increasingly prefer online, hybrid and shorter credential-based programs that allow them to continue earning while developing new skills. Employer-sponsored education is also becoming more important as organizations use tuition assistance, customized training and direct hiring pathways to address internal talent shortages. These partnerships can reduce students’ education costs, strengthen enrollment visibility and improve retention because learners can connect their studies with clear career advancement opportunities. Schools are also using artificial intelligence and automation to streamline applications, personalize student support, identify learners at risk of dropping out and improve classroom delivery. New programs in healthcare, technology and other high-demand fields should further broaden the addressable market, while improved retention can support enrollment growth without equally large increases in marketing spending.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Schools industry is an 18-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #172, which places it in the bottom 30% 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 bleak 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 bottom 50% of the Zacks-ranked industries is a result of a lower earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since May 2026, the industry’s earnings estimates for 2027 have decreased to $2.15 per share (from $2.16).
Despite the industry’s blurred near-term view, we will present a few stocks that one may consider adding to their portfolio. Before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.
Industry Outperforms Sector, Lags S&P 500
The Zacks Schools industry has lagged the Zacks S&P 500 composite but performed a little better than the broader Zacks Consumer Discretionary sector over the past year.
The stocks in this industry have collectively lost 5.6% compared with the broader sector’s 13.3% decline. Meanwhile, the S&P 500 has risen 22.8% in the said period.
One-Year Price Performance
Industry's Current Valuation
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 11.33 versus the S&P 500’s 21.02 and the sector’s 16.66.
Over the past five years, the industry has traded as high as 290.96, as low as 11.21 and at a median of 19.17, as the chart below shows.
Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500
Industry’s P/E Ratio (Forward 12-Month) Versus Sector
3 Schools Stocks to Keep an Eye On
Below, we have discussed three stocks from the industry that have solid growth potential.
American Public Education: Based in Charles Town, WV, American Public Education delivers online and campus-based postsecondary education and career-focused learning across the United States. APEI is gaining from sustained demand for healthcare education, particularly pre-licensure nursing programs, supported by continued enrollment momentum and selective tuition increases. The company is expanding its campus network into attractive markets while pursuing institutional integration to unlock future cross-selling opportunities and broaden program availability. Growth is also supported by resilient demand from military personnel, veterans and military families, with particularly strong momentum in the latter two groups. Investments in marketing, technology modernization and new campus development, combined with a simplified operating structure and disciplined execution of its long-term strategy, are expected to strengthen enrollment, enhance scalability and support sustainable long-term expansion.
APEI stock — currently sporting a Zacks Rank #1 (Strong Buy) — has surged 68.7% over the past year. APEI has seen an upward estimate revision for 2026 earnings to $2.59 per share from $2.54 over the past 60 days. This company’s earnings for 2026 are expected to grow 90.4% on 6.5% higher revenues. APEI’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 157.7%. APEI’s three-to-five-year expected earnings per share growth rate is currently pegged at 15%. It also has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: APEI
Lincoln Educational Services: This Parsippany, NJ-based provider of career-focused postsecondary education offers training programs to high school graduates and working adults across the United States. Lincoln Educational Services continues to benefit from strong demand for skilled trades education as employers face persistent shortages of qualified workers and interest shifts toward career-focused training. Growth is being supported by expanding programs at existing campuses, new campus openings in underserved markets and broader partnerships with corporate and government organizations for workforce training. The company is also gaining from its hybrid learning platform, which improves flexibility, student retention and operating efficiency, while targeted outreach to high schools and veterans is expected to strengthen the enrollment pipeline. Continued investment in high-demand programs and favorable support for skilled trades education further reinforces long-term growth prospects.
LINC stock — currently carrying a Zacks Rank #3 (Hold) — has soared 92.1% over the past year. LINC has remained unchanged at 78 cents over the past 60 days. This company’s earnings for 2026 are expected to decline 15.2% on 14.9% higher revenues. LINC’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 115.2%. LINC’s three-to-five-year expected earnings per share growth rate is currently pegged at 15%. It also has a VGM Score of A.
Price and Consensus: LINC
Perdoceo: Based in Schaumburg, IL, Perdoceo provides online, campus-based and blended postsecondary education programs across the United States. The company’s growth is being driven by sustained demand for flexible online and hybrid education programs, supported by strong student retention and continued interest from working professionals. The company is expanding its corporate education partnerships, helping employers develop their workforce while attracting new learners. Ongoing investments in technology and artificial intelligence are improving student engagement, academic outcomes and enrollment efficiency, while new AI-focused courses are expected to broaden its offerings. Growth is also supported by the expansion of healthcare-focused programs, introduction of new learning modalities and continued investment in marketing, admissions and student support, positioning the company for sustainable long-term enrollment and revenue growth.
Perdoceo stock — currently carrying a Zacks Rank #3 — has gained 9.6% over the past year. This company’s earnings for 2026 are expected to grow 19.2% on 2.4% higher revenues. PRDO’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 6.5%. PRDO’s three-to-five-year expected earnings per share growth rate is currently pegged at 15%. It also has a VGM Score of A.
Price and Consensus: PRDO
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This article originally published on Zacks Investment Research (zacks.com).