The Zacks Schools industry is progressing through 2026 with a gradually improving medium-term outlook, supported by steady demand for applied and career-oriented education across healthcare, skilled trades, cybersecurity and IT. Labor-market dynamics continue to favor job-ready training models, positioning institutions with strong employer alignment to benefit. Technology adoption is emerging as a key differentiator, with data-driven instruction, adaptive learning and scalable online platforms supporting better engagement, outcomes and cost efficiency. Industry consolidation is also gaining pace, enabling scale benefits and broader program offerings. Policy support, including expanded Workforce Pell access and favorable veteran benefits, appears constructive, aiding affordability and improving enrollment visibility for players such as McGraw Hill, Inc. (MH Quick QuoteMH - Free Report) , Strategic Education, Inc. (STRA Quick QuoteSTRA - Free Report) , Lincoln Educational Services Corporation (LINC Quick QuoteLINC - Free Report) and American Public Education, Inc. (APEI Quick QuoteAPEI - Free Report) .

However, the industry continues to face notable headwinds. A shrinking traditional student base and intensifying competition from public and nonprofit institutions are weighing on enrollment growth. Affordability concerns remain persistent, while regulatory scrutiny around student outcomes, financial transparency and federal aid eligibility is tightening, increasing compliance costs and execution risks, particularly for career-focused providers. At the same time, rising marketing, labor and technology expenses are pressuring margins and ongoing uncertainty around student-aid processes and loan policies continues to impact enrollment trends and pricing flexibility.

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 School Industry

Rising Demand for Workforce-Oriented Programs: After years of enrollment declines, the U.S. for-profit education sector is seeing renewed demand for programs with clear employment outcomes. Providers are leveraging flexible models to expand short-term credentials in healthcare, cybersecurity, skilled trades and IT. As employers prioritize job-ready skills over traditional degrees, adult learners and career changers are driving interest. Government reskilling initiatives and workforce partnerships, along with ongoing digital transformation, are further supporting demand for tech-aligned and non-degree programs.

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. 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 regulatory and demographic pressures, the sector is consolidating as larger players acquire smaller institutions to expand offerings and scale. Strategic Education’s tech bootcamp deals and Covista’s integration of Walden University reflect a shift toward healthcare and workforce training, while continued private equity interest signals confidence in ROI-driven, career-focused education segments.

Congress passed “Workforce Pell” in July 2025, aiming to extend Pell Grant eligibility to short-term, job-focused programs from July 1, 2026. While this could expand the market for providers in healthcare, IT and skilled trades, the rollout depends on final regulations and program eligibility, which may affect near-term enrollment and pricing benefits.

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, Strategic Education, and Adtalem 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.

Financial & Competitive Pressures: For 2026, margin pressure is set to intensify for for-profit education providers as rising costs and tougher competition collide. Faculty, support services, marketing and technology expenses are outpacing revenue growth, while aggressive enrollment competition is driving up lead-generation costs. At the same time, stricter regulatory and outcomes requirements demand higher spending. With tuition pricing constrained by affordability and student-aid sensitivity, profitability will depend increasingly on efficiency, scale and disciplined capital allocation.

Operational Challenges: 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. FAFSA processing challenges continue, prompting late disbursement flexibilities and straining working capital for institutions reliant on Title IV funding cycles. Ongoing operational delays early in the year disrupted receivables timing, while new FVT/GE reporting requirements add compliance burdens and may drive adjustments to program portfolios.

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.

Zacks Industry Rank Indicates Bright 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 #25, which places it in the top 10% 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 optimistic 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 March 2026, the industry’s earnings estimates for 2026 have increased to $1.85 per share (from $1.81).

We highlight a few stocks that investors may consider adding to their portfolios. First, we examine the industry’s shareholder returns and current valuation backdrop.

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 2.1% compared with the broader sector’s 2.3% decline. Meanwhile, the S&P 500 has increased 31.6% 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 12.08X versus the S&P 500’s 21.95X and the sector’s 16.96X.

Over the past five years, the industry has traded as high as 290.96X, as low as 12.08X and at a median of 19.62X, 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

4 School Stocks to Buy Now

Below, we have discussed four 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. The company is positioned for growth on the back of strong enrollment trends and strategic execution across its education platforms. Momentum in the healthcare segment, particularly at Rasmussen and Hondros, reflects sustained demand for nursing and allied health programs, while initiatives like “Fill the Back Row” are improving capacity utilization and driving operating leverage. The company is also benefiting from portfolio diversification and integration synergies across institutions, which should enhance revenue opportunities and marketing efficiency. Expansion into new campuses and programs, along with improving military and veteran enrollment trends at APUS as funding normalizes, provides additional upside. Coupled with cost optimization, refinancing-led savings and a strong balance sheet, American Public Education has clear visibility into revenue growth and margin expansion ahead. 

APEI stock — currently sporting a Zacks Rank #1 (Strong Buy) — surged 145.5% in the past year. APEI has seen an upward estimate revision for 2026 earnings to $2.38 per share from $2.23 over the past 60 days. This company’s earnings for 2026 are expected to grow 75% on 6.4% higher revenues. APEI’s earnings topped the Zacks Consensus Estimate in all the last four quarters, with the average surprise being 187.5%. Moreover, APEI’s three-to-five-year expected earnings per share growth rate is currently pegged at 15%. 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 is benefiting from strong structural demand for skilled trades, driven by a widening labor shortage, rising skepticism toward traditional four-year degrees and growing employer demand across sectors like HVAC, automotive and electrical work. The company’s growth is supported by consistent student start expansion, new campus openings and program replications, alongside solid organic growth at existing locations. Its hybrid “Lincoln 10.0” model is improving accessibility and efficiency, while corporate partnerships and high school initiatives are expanding enrollment channels. Continued investments in new campuses and underserved markets, combined with improving placement rates and operating leverage, position LINC for sustained revenue and earnings growth. 

LINC stock — currently carrying a Zacks Rank #2 (Buy) — surged 133.9% in the past year. LINC has seen an upward estimate revision for 2026 earnings to 71 cents per share from 70 cents over the past 60 days. This company’s earnings for 2026 are expected to decline 22.8% on 13% higher revenues. LINC’s earnings topped the Zacks Consensus Estimate in all the last four quarters, with the average surprise being 96.4%. Moreover, LINC’s three-to-five-year expected earnings per share growth rate is currently pegged at 15%.

Price and Consensus: LINC

Strategic Education: This company offers campus-based and online post-secondary education, focusing on building job-ready skills, and is headquartered in Herndon, VA. Strategic Education’s growth prospects are increasingly tied to its shift toward higher-value, scalable segments. The Education Technology Services division remains a key driver, with strong momentum in Sophia Learning subscriptions and expanding Workforce Edge partnerships, which now cover millions of employees and are boosting enrollment into core universities. The company’s employer-focused strategy is also gaining traction, with employer-affiliated enrollment reaching record levels and supported by healthcare program demand. Additionally, continued investment in AI-driven productivity and cost efficiencies is supporting margin expansion, while improving enrollment trends suggest revenue growth could accelerate beyond the first-quarter low point.

STRA stock — currently carrying a Zacks Rank #2 — lost 2.9% in the past year. Nonetheless, STRA has seen an upward estimate revision for 2026 earnings to $7.12 per share from $6.97 over the past seven days. This company’s earnings for 2026 are expected to grow 15.2% on 2.8% higher revenues. STRA’s earnings topped the Zacks Consensus Estimate in three of the last four quarters and missed on one occasion, with the average surprise being 11.2%. Moreover, STRA’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: STRA

McGraw Hill: This company delivers digital learning and educational content for K-12, higher education and professional markets and is headquartered in Columbus, OH. McGraw Hill is well positioned for long-term growth, supported by strong momentum in its higher education segment, driven by market share gains, enrollment strength and pricing, alongside rapid adoption of its Evergreen platform and Inclusive Access model. The company’s shift toward a digital, subscription-based model—where recurring revenue now forms a large majority—enhances visibility and margins. AI-led innovation, including tools like AI Reader and Sharpen Advantage, is boosting engagement and expanding addressable markets. Additionally, expanding institutional sales, cross-selling opportunities and upcoming large K-12 adoption cycles position the company for sustained growth and a return to stronger revenue expansion in fiscal 2027.

MH stock — currently carrying a Zacks Rank #2 — lost 29.5% in the past year. Nonetheless, STRA has seen an upward estimate revision for fiscal 2026 and 2027 earnings to $1.81 per share (from $1.79) and to $1.81 per share (from $1.78) over the past seven days, respectively. This company’s earnings for fiscal 2027 are expected to grow 0.2% on 4.2% higher revenues. MH’s earnings topped the Zacks Consensus Estimate in the last two quarters, with the average surprise being 380%. It also has a VGM Score of B.

Price and Consensus: MH