8 Best Education Software for February 2026
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Market Overview & Selection Criteria
The education software sector presents compelling opportunities for value-focused analysis amid shifting market dynamics, with many companies showing strong margins and growth potential despite recent 1Y returns. These 8 best education software stock picks were selected using ValueSense's proprietary methodology, prioritizing Quality ratings above 5.0, favorable intrinsic value comparisons to implied market pricing, robust ROIC, healthy gross margins, and positive free cash flow generation. Stocks span consumer staples like beverages (STZ) to pure-play edtech firms, emphasizing undervalued names in education software stock picks with diversification across market caps from micro-cap to large-cap. This watchlist highlights top stocks to buy now for investors analyzing undervalued stocks in tech and software subsectors.
Featured Stock Analysis
Stock #1: Constellation Brands, Inc. (STZ)
| Metric | Value |
|---|---|
| Market Cap | $27.1B |
| Quality Rating | 6.1 |
| Intrinsic Value | $61.5 |
| 1Y Return | -14.5% |
| Revenue | $9,382.5M |
| Free Cash Flow | $432.4M |
| Revenue Growth | (7.9%) |
| FCF margin | 4.6% |
| Gross margin | 52.0% |
| ROIC | 19.6% |
| Total Debt to Equity | 133.3% |
Investment Thesis
Constellation Brands, Inc. (STZ) stands out in this education software-adjacent watchlist with a solid Quality rating of 6.1 and Market Cap of $27.1B, reflecting stability in a larger-cap profile. Despite a -14.5% 1Y Return, its intrinsic value of $61.5 suggests undervaluation potential for value investors. Key financials include Revenue of $9,382.5M, Free Cash Flow of $432.4M (4.6% FCF margin), Gross margin of 52.0%, and impressive ROIC of 19.6%, though Revenue growth contracted 7.9% and Total Debt to Equity sits at 133.3%. This profile indicates a mature player with cash generation strength, suitable for portfolios seeking defensive exposure with recovery upside in undervalued staples tied to broader market themes.
Key Catalysts
- Strong ROIC at 19.6% signals efficient capital use for long-term compounding.
- Healthy Gross margin of 52.0% supports pricing power in branded products.
- Positive Free Cash Flow of $432.4M enables dividends or buybacks amid sector rotation.
Risk Factors
- Negative Revenue growth -7.9% amid potential demand slowdowns.
- Elevated Total Debt to Equity 133.3% increases balance sheet vulnerability.
- Modest FCF margin 4.6% limits aggressive expansion flexibility.
Stock #2: Tyler Technologies, Inc. (TYL)
| Metric | Value |
|---|---|
| Market Cap | $15.9B |
| Quality Rating | 6.2 |
| Intrinsic Value | $539.9 |
| 1Y Return | -38.3% |
| Revenue | $2,298.3M |
| Free Cash Flow | $618.9M |
| Revenue Growth | 10.6% |
| FCF margin | 26.9% |
| Gross margin | 44.8% |
| ROIC | 7.0% |
| Total Debt to Equity | 18.7% |
Investment Thesis
Tyler Technologies, Inc. (TYL), with a Market Cap of $15.9B and Quality rating of 6.2, offers enterprise software appeal in public sector solutions, aligning with edtech-adjacent government efficiency trends. Trading dynamics show a steep -38.3% 1Y Return against an intrinsic value of $539.9, highlighting deep value for patient analysts. Metrics feature Revenue of $2,298.3M, robust Free Cash Flow of $618.9M (26.9% FCF margin), Gross margin of 44.8%, ROIC of 7.0%, and low Total Debt to Equity of 18.7%, bolstered by 10.6% Revenue growth. This positions TYL as a high-margin growth name in stock watchlist considerations for software diversification.
Key Catalysts
- Exceptional FCF margin 26.9% and $618.9M cash flow fuel R&D and acquisitions.
- Steady Revenue growth 10.6% from recurring public sector contracts.
- Low Total Debt to Equity 18.7% provides financial flexibility.
Risk Factors
- Lower ROIC 7.0% compared to peers may signal scaling inefficiencies.
- Sharp -38.3% 1Y Return reflects market volatility in tech spending.
- Dependence on government budgets could pressure near-term growth.
Stock #3: Stride, Inc. (LRN)
| Metric | Value |
|---|---|
| Market Cap | $3,582.8M |
| Quality Rating | 7.1 |
| Intrinsic Value | $109.0 |
| 1Y Return | -36.9% |
| Revenue | $2,519.2M |
| Free Cash Flow | $259.4M |
| Revenue Growth | 14.9% |
| FCF margin | 10.3% |
| Gross margin | 39.3% |
| ROIC | 24.5% |
| Total Debt to Equity | 36.6% |
Investment Thesis
Stride, Inc. (LRN) earns a top Quality rating of 7.1 in this collection, with Market Cap $3,582.8M and intrinsic value $109.0 versus -36.9% 1Y Return, pointing to rebound potential in online education. Financials shine with Revenue $2,519.2M, Free Cash Flow $259.4M (10.3% margin), Gross margin 39.3%, standout ROIC 24.5%, 14.9% Revenue growth, and manageable Total Debt to Equity 36.6%. LRN exemplifies best value stocks in edtech, balancing growth and profitability for diversified investment opportunities.
Key Catalysts
- High ROIC 24.5% and 14.9% Revenue growth drive enrollment expansion.
- Solid Free Cash Flow $259.4M supports tech platform investments.
- Strong Quality rating 7.1 underscores competitive moat in K-12 online learning.
Risk Factors
- Recent -36.9% 1Y Return amid regulatory scrutiny on virtual schooling.
- Moderate FCF margin 10.3% vulnerable to enrollment fluctuations.
- Total Debt to Equity 36.6% requires monitoring in rising rate environments.
Stock #4: Blackbaud, Inc. (BLKB)
| Metric | Value |
|---|---|
| Market Cap | $2,513.7M |
| Quality Rating | 6.6 |
| Intrinsic Value | $7,202.6 |
| 1Y Return | -30.1% |
| Revenue | $282.0B |
| Free Cash Flow | $276.1M |
| Revenue Growth | 24,461.1% |
| FCF margin | 0.1% |
| Gross margin | 59.6% |
| ROIC | 4,571.7% |
| Total Debt to Equity | 984.0% |
Investment Thesis
Blackbaud, Inc. (BLKB) features a Quality rating of 6.6, Market Cap $2,513.7M, and extraordinary intrinsic value $7,202.6, contrasting -30.1% 1Y Return for profound undervaluation in nonprofit software. Metrics include massive Revenue $282.0B, Free Cash Flow $276.1M (0.1% margin), Gross margin 59.6%, extreme ROIC 4,571.7%, explosive 24,461.1% Revenue growth, but high Total Debt to Equity 984.0%. BLKB offers high-upside analysis for BLKB analysis seekers in SaaS for education and philanthropy.
Key Catalysts
- Astonishing ROIC 4,571.7% and Revenue growth 24,461.1% signal breakout momentum.
- Elevated Gross margin 59.6% from sticky subscription revenue.
- Scale via $282.0B Revenue positions for market dominance.
Risk Factors
- Sky-high Total Debt to Equity 984.0% poses refinancing risks.
- Thin FCF margin 0.1% despite cash flow, limiting buffers.
- -30.1% 1Y Return tied to integration challenges post-growth spurt.
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Stock #5: Youdao, Inc. (DAO)
| Metric | Value |
|---|---|
| Market Cap | $1,247.1M |
| Quality Rating | 5.9 |
| Intrinsic Value | $10.4 |
| 1Y Return | 33.5% |
| Revenue | CN¥5,675.6M |
| Free Cash Flow | CN¥0.0 |
| Revenue Growth | (1.6%) |
| FCF margin | 0.0% |
| Gross margin | 44.9% |
| ROIC | 26.2% |
| Total Debt to Equity | (91.8%) |
Investment Thesis
Youdao, Inc. (DAO), at Market Cap $1,247.1M and Quality rating 5.9, bucks the trend with +33.5% 1Y Return and intrinsic value $10.4, ideal for China edtech exposure. Data shows Revenue CN¥5,675.6M, Free Cash Flow CN¥0.0 (0.0% margin), Gross margin 44.9%, ROIC 26.2%, slight Revenue growth decline -1.6%, and negative Total Debt to Equity -91.8%. DAO provides unique international flavor in undervalued stocks to buy for global diversification.
Key Catalysts
- Positive ROIC 26.2% and +33.5% 1Y Return amid China recovery.
- Net cash position via negative Total Debt to Equity -91.8%.
- Steady Gross margin 44.9% in language learning demand.
Risk Factors
- Zero Free Cash Flow (CN¥0.0) hampers scalability.
- Negative Revenue growth -1.6% from regulatory headwinds.
- Currency and geopolitical risks in CN¥ reporting.
Stock #6: Docebo Inc. (DCBO)
| Metric | Value |
|---|---|
| Market Cap | $560.5M |
| Quality Rating | 6.5 |
| Intrinsic Value | $28.3 |
| 1Y Return | -54.1% |
| Revenue | $236.0M |
| Free Cash Flow | $28.3M |
| Revenue Growth | 13.0% |
| FCF margin | 12.0% |
| Gross margin | 80.4% |
| ROIC | 70.0% |
| Total Debt to Equity | 6.4% |
Investment Thesis
Docebo Inc. (DCBO) holds a Quality rating 6.5, Market Cap $560.5M, intrinsic value $28.3, and -54.1% 1Y Return, targeting corporate learning management. Highlights: Revenue $236.0M, Free Cash Flow $28.3M (12.0% margin), top Gross margin 80.4%, elite ROIC 70.0%, 13.0% Revenue growth, low Total Debt to Equity 6.4%. DCBO fits investment opportunities in high-margin SaaS for enterprise training.
Key Catalysts
- Exceptional ROIC 70.0% and Gross margin 80.4% for profitability edge.
- 13.0% Revenue growth with $28.3M Free Cash Flow acceleration.
- Minimal debt (6.4% Total Debt to Equity) aids agility.
Risk Factors
- Steep -54.1% 1Y Return signals valuation reset risks.
- Smaller cap exposes to acquisition or dilution volatility.
- Growth dependence on LMS market adoption.
Stock #7: Skillsoft Corp. (SKIL)
| Metric | Value |
|---|---|
| Market Cap | $76.8M |
| Quality Rating | 4.9 |
| Intrinsic Value | $94.7 |
| 1Y Return | -69.7% |
| Revenue | $515.8M |
| Free Cash Flow | $6,210.0K |
| Revenue Growth | (3.6%) |
| FCF margin | 1.2% |
| Gross margin | 80.1% |
| ROIC | (9.6%) |
| Total Debt to Equity | 208.2% |
Investment Thesis
Skillsoft Corp. (SKIL), micro-cap at $76.8M with Quality rating 4.9, boasts intrinsic value $94.7 against -69.7% 1Y Return for speculative value. Figures: Revenue $515.8M, Free Cash Flow $6,210.0K (1.2% margin), Gross margin 80.1%, negative ROIC -9.6%, -3.6% Revenue growth, Total Debt to Equity 208.2%. SKIL suits high-conviction plays in corporate upskilling.
Key Catalysts
- High Gross margin 80.1% and $94.7 intrinsic value upside.
- Content library scale via $515.8M Revenue.
- Potential turnaround from low base post-restructuring.
Risk Factors
- Negative ROIC -9.6% and Revenue growth -3.6%.
- High Total Debt to Equity 208.2% strains liquidity.
- Extreme -69.7% 1Y Return heightens delisting risks.
Stock #8: zSpace, Inc. (ZSPC)
| Metric | Value |
|---|---|
| Market Cap | $10.3M |
| Quality Rating | 5.4 |
| Intrinsic Value | $7.4 |
| 1Y Return | -97.6% |
| Revenue | $31.5M |
| Free Cash Flow | ($19.1M) |
| Revenue Growth | (24.2%) |
| FCF margin | (60.5%) |
| Gross margin | 45.5% |
| ROIC | (950.6%) |
| Total Debt to Equity | (55.7%) |
Investment Thesis
zSpace, Inc. (ZSPC), smallest at $10.3M Market Cap and Quality rating 5.4, shows intrinsic value $7.4 amid -97.6% 1Y Return, focusing AR/VR education hardware. Data: Revenue $31.5M, negative Free Cash Flow ($19.1M, -60.5% margin), Gross margin 45.5%, dire ROIC -950.6%, -24.2% Revenue growth, negative Total Debt to Equity -55.7%. ZSPC represents high-risk, high-reward in immersive edtech.
Key Catalysts
- Net cash via negative Total Debt to Equity -55.7%.
- Niche AR/VR positioning for K-12 adoption rebound.
- Intrinsic value $7.4 offers speculative floor.
Risk Factors
- Negative Free Cash Flow -$19.1M and ROIC -950.6%.
- Severe declines: -97.6% 1Y Return, -24.2% Revenue growth.
- Micro-cap illiquidity amplifies volatility.
Portfolio Diversification Insights
This stock watchlist clusters around education software themes, with STZ providing consumer staples balance, TYL and BLKB adding enterprise stability, LRN and DCBO targeting growth in online/corporate learning, DAO for international exposure, and SKIL/ZSPC as micro-cap spec plays. Sector allocation leans 75% software/tech (TYL, LRN, BLKB, DAO, DCBO, SKIL, ZSPC) and 25% diversified (STZ), reducing correlation risks. Larger caps (STZ, TYL) anchor volatility from smaller names (ZSPC, SKIL), while high ROIC leaders (DCBO, LRN) complement cash-rich profiles (DAO). Cross-references like DCBO's 80.4% margins echo SKIL's 80.1%, enabling 20-30% allocation per tier for balanced portfolio diversification in best value stocks.
Market Timing & Entry Strategies
Consider entry during edtech sector dips, targeting intrinsic value discounts >20% (e.g., TYL at $539.9, BLKB at $7,202.6). Ladder positions over 3-6 months amid earnings catalysts like LRN's enrollment reports or DCBO's subscriber growth. Monitor Revenue growth turnarounds (e.g., STZ post-contraction) and FCF inflection for smaller caps like SKIL. Use scale-ins on volatility, pairing with Quality rating >6.0 filters (TYL, LRN, BLKB, DCBO) for core holdings, while allocating 10% to high-upside like ZSPC on product launches. This approach suits market timing for undervalued stocks to buy without over-concentration.
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FAQ Section
How were these stocks selected?
These 8 best stock picks were chosen via ValueSense criteria emphasizing Quality ratings 4.9-7.1, strong intrinsic values, ROIC, and gross margins, focusing on education software for undervalued investment opportunities.
What's the best stock from this list?
LRN leads with the highest Quality rating 7.1, 24.5% ROIC, and 14.9% Revenue growth, making it a standout in this stock picks collection for balanced metrics.
Should I buy all these stocks or diversify?
Diversify across tiers: 50% large/mid-caps (STZ, TYL), 30% growth (LRN, DCBO), 20% speculative (SKIL, ZSPC) to mitigate risks in this stock watchlist.
What are the biggest risks with these picks?
Key concerns include high debt (BLKB 984.0%, STZ 133.3%), negative cash flows (ZSPC -$19.1M), and 1Y declines averaging -50%+, plus sector-specific regulations.
When is the best time to invest in these stocks?
Optimal timing aligns with intrinsic value gaps widening on dips, post-earnings for growth confirmations (e.g., DCBO Revenue), or edtech policy tailwinds for top stocks to buy now.