Skillsoft Plummets 75% in a Year: Should You Hold or Fold the Stock?

Skillsoft Corp. SKIL shares have plummeted 75.2% in a year against 4.4% growth in its industry and a 19.1% rise in the Zacks S&P 500 Composite.

SKIL has underperformed its industry peer Coherent Corp.’s COHR 161.5% upsurge and Dave’s DAVE 71.2% growth in the same period.

1-Year Share Price Performance

The six-month performance highlights that SKIL has underperformed Coherent Corp and Dave. Skillsoft has lost 47.2% against Coherent Corp and Dave’s 95.9% and 0.4% rallies, respectively.

Let us evaluate the SKIL stock to find out whether investors should buy the stock now, hold it, or square off their positions.  

SKIL’s Proactive Approach Toward the GK Segment

In the third quarter of fiscal 2026, Skillsoft announced the strategic review for its Global Knowledge (“GK”) segment with the anticipation of a sale. This massive step was taken after the company logged a 6% year-over-year decline in its top line due to a 16% dip in GK’s revenues.

Revenues from the GK segment tanked on the back of softer demand for physical and virtual instructor-led sessions. SKIL recorded $20.8 million in non-cash goodwill impairment loss that led to a $4.9-million adjusted net loss. Therefore, a potential sale of the GK segment could affect the balance sheet due to market reduction.

While the Talent Development Solutions (“TDS”) segment experienced a 2% year-over-year dip due to a drop in the B2C learner product, the CFO stated that the detriment in GK’s performance masked TDS enterprise stabilization. Despite this turmoil, the management is optimistic about the future of AI and how it adds to the company’s growth. SKIL’s AI-backed Percipio platform logged early success as demonstrated by the first four large enterprise customers.

Having said that, it is fascinating to witness management’s decision not to provide revenues and adjusted EBITDA outlook for the GK segment while reaffirming the guidance for the TDS segment. We believe that this move insinuates a major inclination of the management toward the digital subscription business. Therefore, we expect the strategic pivot from the GK segment to have a positive impact on the business, pushing the company in the right direction.

Skillsoft: A Cheap Stock With Strong Capital Returns

SKIL is trading at 1.6 times forward 12-month price-to-earnings, way below the industry average of 23.4 times. Its trailing 12-month EV-to-EBITDA ratio stands at 2.5, significantly lower than the industry average of 17.1. The company’s discounted value is well paired with its robust capital returns.

Return on equity (ROE) is a profitability metric that assesses how effectively a company utilizes shareholders' equity to generate earnings. By the end of the third quarter of fiscal 2026, SKIL’s ROE was 83.1%, outpacing the industry’s 15.6%.

Return on invested capital highlights a company’s efficacy in deploying total capital to generate operating profits. In the case of Skillsoft, it stands at 11.6%, surpassing the industry average of 7.7%.

SKIL Faces Liquidity Crunch

Skillsoft’s current ratio raises caution around its liquidity position. In the third quarter of fiscal 2026, SKIL registered a current ratio of 0.8, substantially below the industry average of 1.6. A current ratio below 1 does not bode well with investors, and a consistently low current ratio is a major red flag, raising questions about liquidity sustainability in the long haul.

Skillsoft’s Weak Top & Bottom-Line Outlook

For the fourth quarter of fiscal 2026, the consensus estimate for revenues is pegged at $130.2 million. The metric is anticipated to dip 2.7% from that reported in the year-ago quarter. The Zacks Consensus Estimate for EPS is set at $1.27, suggesting a 39.8% year-over-year decline.

For fiscal 2026, the Zacks Consensus Estimate is pinned at $512.2 million, indicating a 3.6% year-over-year dip. For EPS, the consensus estimate is at $4.17, implying a 3.7% fall from that reported in the preceding year.

Verdict: Hold Skillsoft Now

Management’s decision to conduct a strategic review of the GK segment appears vital to the company’s future. Shedding this segment could potentially allow the TDS segment to shine and aid the Percipio platform to deliver better results. Furthermore, the stock appears cheaper than the industry average and generates better capital returns as well.

However, SKIL’s precarious liquidity position shadows the strengths. A current ratio that hovers lower than 1 is a red flag. Also, the company’s top and bottom lines are expected to decline for fiscal 2026, raising concerns.

Therefore, we recommend investors opt for a wait-and-watch approach. Investors who already hold the stock should not add further, and those who are planning to buy the stock should refrain from doing so. Investors must analyze the stabilization of the TDS segment and the results of the GK segment’s strategic pivot before making any move.

Skilsoft carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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