Skillsoft Slips 72% in a Year: How Should Investors Play the Stock?

Core Insights - Skillsoft Corp. (SKIL) shares have decreased by 72.2% over the past year, significantly underperforming its industry, which grew by 17.3%, and the Zacks S&P 500 Composite, which rose by 21% [1] - The company is currently reviewing strategic alternatives for its Global Knowledge (GK) business segment, which has experienced a 16% decline in revenues, leading to a potential sale [5][8] - Management is optimistic about the future of its AI-driven Percipio platform, which has already secured its first four large enterprise customers [9] Performance Comparison - Over the past six months, SKIL has declined by 47.1%, while Acuity, Inc. (AYI) and AppLovin (APP) have seen growth of 22.2% and 79.5%, respectively [4] - In the last year, Acuity and AppLovin have increased by 18.2% and 92.2%, respectively, further highlighting SKIL's underperformance [1] Financial Metrics - Skillsoft's return on equity (ROE) stands at 83.1%, significantly higher than the industry average of 15.3% [11] - The return on invested capital (ROIC) for Skillsoft is 11.6%, which is above the industry average of 7.7% [13] - SKIL is trading at 1.76 times forward 12-month price-to-earnings, well below the industry average of 26.05 times, and its trailing 12-month EV-to-EBITDA ratio is 2.55, compared to the industry average of 18.29 [14] Strategic Outlook - The management's decision to focus on the Talent Development Solutions (TDS) segment and the AI-backed Percipio platform is seen as a critical move for future growth [10][16] - The potential sale of the GK segment could positively impact the company's balance sheet and market position [6][10] - The current trading discount presents an attractive opportunity for value-oriented investors [14][17]