Skillsoft Plummets 69% YTD: Should You Buy the Stock or Hold Back?

Core Insights - Skillsoft Corp. (SKIL) shares have decreased by 69.2% year-to-date, significantly underperforming its industry, which has grown by 22.4%, and the Zacks S&P 500 Composite, which has risen by 20.7% [1] - The company has also lagged behind peers such as JBT Marel Corporation and MediaAlpha, which have seen increases of 9.9% and 17.8%, respectively [1] Year-to-Date Share Price Performance - Year-to-date, Skillsoft has declined by 69.2%, while JBT Marel and MediaAlpha have shown growth of 9.9% and 17.8% [1] - Over the past six months, Skillsoft's performance has been a decline of 58.2%, contrasting with JBT Marel's 12.9% growth and MediaAlpha's 20% growth [4] AI-Focused Innovations - Skillsoft's strategy includes AI-driven innovations aimed at enhancing learning design and skills intelligence, with over 20,000 certificates earned in areas like cloud, data, AI, and cybersecurity [5] - The company has improved a global semiconductor manufacturer's learning ecosystem for 43,000 employees, showcasing its commitment to AI-led innovation [6] - The Percipio platform has seen a 74% year-over-year increase in AI learners and a 158% increase in AI learning hours, indicating strong market demand for AI upskilling solutions [8] Financial Performance and Guidance - Skillsoft has lowered its fiscal 2026 revenue guidance from an initial expectation of $530-$545 million to a new range of $510-$530 million due to weak federal and discretionary spending [14] - The Zacks Consensus Estimate for fiscal 2026 revenues is $515.9 million, reflecting a 2.8% year-over-year decline, while the earnings per share estimate is $3.48, indicating a 19.6% year-over-year dip [18] Valuation and Capital Return - Skillsoft's return on equity (ROE) stands at 16.03%, surpassing the industry average of 15.29%, suggesting effective utilization of shareholders' equity [9] - The company is trading at a forward price-to-earnings ratio of 1.48, significantly below the industry average of 26.64, indicating potential undervaluation [11] Liquidity Position - As of the second quarter of fiscal 2026, Skillsoft's current ratio is 0.85, down from 0.88 in the previous year, which is below the industry average of 1.58, indicating challenges in meeting short-term obligations [16]