8 Best Regtech for February 2026
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Market Overview & Selection Criteria
The regtech sector is experiencing robust growth amid increasing regulatory demands and digital transformation in financial services. ValueSense analysis highlights 8 undervalued regtech stocks selected based on intrinsic value metrics, quality ratings, revenue growth, and free cash flow generation. These picks emphasize companies trading below their calculated intrinsic values, offering potential for value-oriented investors. Selection criteria include a Quality rating above 5.0 where possible, positive revenue trajectories, and strong margins like FCF and gross margins. This watchlist focuses on diversified regtech plays from digital banking to compliance software, ideal for stock picks targeting long-term appreciation.
Featured Stock Analysis
Stock #1: Nu Holdings Ltd. (NU)
| Metric | Value |
|---|---|
| Market Cap | $87.4B |
| Quality Rating | 6.8 |
| Intrinsic Value | $80.4 |
| 1Y Return | 32.1% |
| Revenue | $13.5B |
| Free Cash Flow | $3,665.8M |
| Revenue Growth | 28.5% |
| FCF margin | 27.1% |
| Gross margin | 43.0% |
| ROIC | 35.8% |
| Total Debt to Equity | 23.1% |
Investment Thesis
Nu Holdings Ltd. (NU) stands out as a high-quality regtech leader with a Quality rating of 6.8 and an intrinsic value of $80.4, suggesting significant upside from current levels. The company boasts a massive $87.4B market cap, impressive $13.5B revenue, and $3,665.8M free cash flow, driven by 28.5% revenue growth and a robust 35.8% ROIC. Strong margins—27.1% FCF and 43.0% gross—underscore operational efficiency, while a low 23.1% total debt to equity ratio supports financial stability. Despite a solid 32.1% 1Y return, NU's metrics position it as a top NU analysis candidate for growth in digital financial services.
Key Catalysts
- Exceptional 28.5% revenue growth fueling expansion in Latin American markets
- Industry-leading 35.8% ROIC indicating superior capital allocation
- High FCF margin of 27.1% enabling reinvestment and shareholder returns
Risk Factors
- Exposure to emerging market volatility in Brazil-centric operations
- Competitive pressures in digital banking space
- Potential regulatory changes impacting fintech scalability
Stock #2: DocuSign, Inc. (DOCU)
| Metric | Value |
|---|---|
| Market Cap | $10.6B |
| Quality Rating | 6.7 |
| Intrinsic Value | $115.7 |
| 1Y Return | -45.2% |
| Revenue | $3,158.9M |
| Free Cash Flow | $987.9M |
| Revenue Growth | 8.4% |
| FCF margin | 31.3% |
| Gross margin | 79.3% |
| ROIC | 19.6% |
| Total Debt to Equity | 14.4% |
Investment Thesis
DocuSign, Inc. (DOCU) presents a compelling DOCU analysis with a 6.7 Quality rating and $115.7 intrinsic value, well above recent trading levels despite a -45.2% 1Y return. At $10.6B market cap, it generates $3,158.9M revenue and $987.9M free cash flow, with 8.4% revenue growth and elite 79.3% gross margin. A 31.3% FCF margin and 19.6% ROIC highlight profitability, complemented by a conservative 14.4% total debt to equity. This positions DOCU as an undervalued regtech play in electronic signatures and compliance workflows.
Key Catalysts
- Dominant 79.3% gross margin supporting margin expansion
- Steady 8.4% revenue growth in enterprise adoption
- Strong 31.3% FCF margin for R&D and acquisitions
Risk Factors
- Recent -45.2% 1Y return signaling market skepticism
- Slowing growth amid economic headwinds
- Competition from free alternatives in document management
Stock #3: Workiva Inc. (WK)
| Metric | Value |
|---|---|
| Market Cap | $4,289.2M |
| Quality Rating | 6.2 |
| Intrinsic Value | $93.0 |
| 1Y Return | -22.3% |
| Revenue | $845.5M |
| Free Cash Flow | $130.3M |
| Revenue Growth | 19.9% |
| FCF margin | 15.4% |
| Gross margin | 77.5% |
| ROIC | (37.0%) |
| Total Debt to Equity | (54.4%) |
Investment Thesis
Workiva Inc. (WK) earns a 6.2 Quality rating with $93.0 intrinsic value, offering upside in the $4,289.2M market cap regtech space. Revenue of $845.5M grows at 19.9%, supported by $130.3M free cash flow, 15.4% FCF margin, and 77.5% gross margin. Despite -22.3% 1Y return and negative ROIC of 37.0% plus 54.4% debt to equity, improving growth metrics make it a WK analysis watchlist contender for cloud-based reporting and compliance.
Key Catalysts
- Accelerating 19.9% revenue growth in SEC reporting tools
- High 77.5% gross margin for scalability
- Positive FCF generation amid platform adoption
Risk Factors
- Negative 37.0% ROIC reflecting capital inefficiencies
- Elevated negative debt to equity at 54.4%
- -22.3% 1Y return amid profitability challenges
Stock #4: ICF International, Inc. (ICFI)
| Metric | Value |
|---|---|
| Market Cap | $1,665.3M |
| Quality Rating | 5.0 |
| Intrinsic Value | $169.3 |
| 1Y Return | -22.2% |
| Revenue | $1,925.5M |
| Free Cash Flow | $141.0M |
| Revenue Growth | (3.8%) |
| FCF margin | 7.3% |
| Gross margin | 28.1% |
| ROIC | 7.5% |
| Total Debt to Equity | 60.9% |
Investment Thesis
ICF International, Inc. (ICFI) features a 5.0 Quality rating and attractive $169.3 intrinsic value in the $1,665.3M market cap range. It reports $1,925.5M revenue, $141.0M free cash flow, and 7.3% FCF margin despite 3.8% revenue growth. Gross margin at 28.1%, 7.5% ROIC, and 60.9% debt to equity provide a balanced profile for ICFI analysis, even with -22.2% 1Y return, positioning it for government regtech contracts.
Key Catalysts
- Stable 7.5% ROIC in advisory services
- Positive FCF of $141.0M supporting dividends
- Large revenue base at $1,925.5M for resilience
Risk Factors
- Contracting 3.8% revenue growth
- High 60.9% debt to equity ratio
- -22.2% 1Y return from sector slowdowns
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Stock #5: LegalZoom.com, Inc. (LZ)
| Metric | Value |
|---|---|
| Market Cap | $1,610.0M |
| Quality Rating | 6.8 |
| Intrinsic Value | $5.9 |
| 1Y Return | -2.9% |
| Revenue | $727.5M |
| Free Cash Flow | $155.8M |
| Revenue Growth | 7.2% |
| FCF margin | 21.4% |
| Gross margin | 65.7% |
| ROIC | 7.5% |
| Total Debt to Equity | 7.3% |
Investment Thesis
LegalZoom.com, Inc. (LZ) shines with a 6.8 Quality rating but trades well above its $5.9 intrinsic value in the $1,610.0M market cap. Revenue hits $727.5M with 7.2% growth, $155.8M free cash flow, 21.4% FCF margin, and 65.7% gross margin. Matching 7.5% ROIC and low 7.3% debt to equity, alongside -2.9% 1Y return, frame LZ analysis as a steady regtech option in legal tech automation.
Key Catalysts
- Solid 21.4% FCF margin for cash generation
- 65.7% gross margin in subscription services
- Low 7.3% debt enabling flexibility
Risk Factors
- Premium pricing relative to $5.9 intrinsic value
- Modest 7.2% revenue growth
- Competitive legal services market
Stock #6: Mitek Systems, Inc. (MITK)
| Metric | Value |
|---|---|
| Market Cap | $459.6M |
| Quality Rating | 6.1 |
| Intrinsic Value | $28.1 |
| 1Y Return | -2.5% |
| Revenue | $179.7M |
| Free Cash Flow | $54.2M |
| Revenue Growth | 4.4% |
| FCF margin | 30.2% |
| Gross margin | 76.2% |
| ROIC | 6.9% |
| Total Debt to Equity | 66.3% |
Investment Thesis
Mitek Systems, Inc. (MITK) holds a 6.1 Quality rating with $28.1 intrinsic value potential at $459.6M market cap. Key metrics include $179.7M revenue, 4.4% growth, $54.2M free cash flow, 30.2% FCF margin, and 76.2% gross margin. ROIC at 6.9% and 66.3% debt to equity, with -2.5% 1Y return, support MITK analysis in identity verification regtech.
Key Catalysts
- Strong 30.2% FCF margin driving profitability
- 76.2% gross margin in mobile capture tech
- Niche leadership in digital identity
Risk Factors
- Elevated 66.3% debt to equity
- Slow 4.4% revenue growth
- Small-cap volatility
Stock #7: CS Disco, Inc. (LAW)
| Metric | Value |
|---|---|
| Market Cap | $394.6M |
| Quality Rating | 6.2 |
| Intrinsic Value | $18.7 |
| 1Y Return | 21.4% |
| Revenue | $152.7M |
| Free Cash Flow | ($16.7M) |
| Revenue Growth | 6.3% |
| FCF margin | (10.9%) |
| Gross margin | 74.6% |
| ROIC | (156.2%) |
| Total Debt to Equity | 0.0% |
Investment Thesis
CS Disco, Inc. (LAW) scores 6.2 Quality with $18.7 intrinsic value at $394.6M market cap. Revenue of $152.7M grows 6.3%, but negative $16.7M free cash flow yields 10.9% FCF margin. High 74.6% gross margin offsets 156.2% ROIC and 0.0% debt, with 21.4% 1Y return boosting LAW analysis for e-discovery regtech.
Key Catalysts
- Positive 21.4% 1Y return momentum
- 74.6% gross margin scalability
- Zero debt providing clean balance sheet
Risk Factors
- Negative $16.7M free cash flow
- Poor 156.2% ROIC
- Early-stage profitability risks
Stock #8: FiscalNote Holdings, Inc. (NOTE)
| Metric | Value |
|---|---|
| Market Cap | $15.6M |
| Quality Rating | 5.8 |
| Intrinsic Value | $3,616.9 |
| 1Y Return | -4.8% |
| Revenue | $29.5B |
| Free Cash Flow | ($16.0M) |
| Revenue Growth | 23,522.0% |
| FCF margin | (0.1%) |
| Gross margin | 82.0% |
| ROIC | (2,999.8%) |
| Total Debt to Equity | 39.4% |
Investment Thesis
FiscalNote Holdings, Inc. (NOTE) has a 5.8 Quality rating and sky-high $3,616.9 intrinsic value at tiny $15.6M market cap. Explosive 23,522.0% revenue growth to $29.5B contrasts $16.0M free cash flow and 0.1% FCF margin. 82.0% gross margin battles 2,999.8% ROIC and 39.4% debt, with -4.8% 1Y return, for high-risk NOTE analysis in AI policy regtech.
Key Catalysts
- Massive 23,522.0% revenue growth trajectory
- Elite 82.0% gross margin
- Vast intrinsic value upside potential
Risk Factors
- Severe 2,999.8% ROIC losses
- Negative free cash flow
- Micro-cap illiquidity and debt
Portfolio Diversification Insights
These 8 regtech stock picks offer strong diversification across subsectors: digital banking (NU), e-signatures (DOCU), reporting (WK), advisory (ICFI), legal tech (LZ), identity (MITK), e-discovery (LAW), and policy AI (NOTE). Allocation leans toward larger caps like NU (50%+ weighting suggested) for stability, with small-caps like NOTE for growth. Tech-heavy but complementary—fintech leaders pair with compliance specialists—reducing sector risk while targeting undervalued stocks in regtech. Cross-references: NU's scale complements DOCU's margins; smaller plays like LAW add e-discovery exposure.
Market Timing & Entry Strategies
Consider entry on pullbacks to intrinsic values, such as NU near $80.4 or DOCU toward $115.7, amid market dips. Monitor revenue growth beats—e.g., WK's 19.9% or NOTE's explosive surge—for momentum. Dollar-cost average into high-quality names like NU (6.8 rating) over 3-6 months. Watch regtech catalysts like AI regulations or fintech M&A. Scale positions based on FCF positivity, avoiding overexposure to negative ROIC plays like LAW until profitability improves. This educational framework aids stock watchlist timing.
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FAQ Section
How were these stocks selected?
These 8 best regtech stock picks were chosen using ValueSense criteria like Quality ratings (5.0+), intrinsic value upside, revenue growth, and margins, focusing on undervalued opportunities in regulatory technology.
What's the best stock from this list?
NU leads with top 6.8 Quality rating, 35.8% ROIC, and 28.5% growth, making it a standout for NU analysis among these regtech picks.
Should I buy all these stocks or diversify?
Diversify across the list for regtech exposure—weight toward high-quality like NU and DOCU—rather than concentrating, balancing growth and stability in your stock watchlist.
What are the biggest risks with these picks?
Key risks include negative ROIC (e.g., LAW, NOTE), high debt (MITK, ICFI), and growth slowdowns (DOCU, LZ), common in regtech volatility.
When is the best time to invest in these stocks?
Target dips to intrinsic values or post-earnings growth beats, using strategies like dollar-cost averaging for investment opportunities in this collection.