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Pegasystems Inc PEGA

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Stock XNAS Rating as of
$62.88 −0.40 (0.63%)
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As of Delayed Price Closed
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Company Report

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Pegasystems Earnings: Pega Cloud Adoption Is Good, While 2024 Is More Back-End-Loaded

Dan Romanoff, Verushka Shetty

We maintain our $65 fair value estimate for no-moat Pegasystems after the firm reported first-quarter results below both our own expectations and FactSet consensus. While weak term license sales weighed on top-line growth in the quarter, we are encouraged with the strong momentum in Pega Cloud. We think the firm's artificial intelligence investments will enable long-term growth by creating more use-cases and thereby greater customer adoption for the Pega platform. Management made no changes to its 2024 outlook, leaving our near-term estimates intact. We see some upside to shares but continue to prefer our wide-moat names with less controversy.

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Price vs Fair Value

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PEGA is trading within a range we consider fairly valued.
Price
$62.88
Fair Value
$92.00
Uncertainty
Very High
1-Star Price
$683.36
5-Star Price
$67.20
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The company has long been a leader in BPM, where use cases are now proliferating to increase productivity and lower costs.

Bears

The model transition has hurt both growth and margins. As is typical in these situations, skepticism on the long-term financial profile has increased.

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News

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Trading Information

Previous Close Price
$63.28
Day Range
$62.68–63.83
52-Week Range
$37.66–69.26
Bid/Ask
$62.39 / $63.39
Market Cap
$5.35 Bil
Volume/Avg
276,438 / 488,477

Key Statistics

Price/Earnings (Normalized)
23.28
Price/Sales
3.73
Dividend Yield (Trailing)
0.19%
Dividend Yield (Forward)
0.19%
Total Yield
0.25%

Company Profile

Founded in 1983, Pegasystems provides a suite of solutions for customer engagement and business process management. The company’s key offering is the Pega Infinity platform, which combines business process management, or BPM, with customer relationship management, or CRM, applications. The company focuses on enterprise-size customers, specifically within the financial, insurance, and healthcare verticals.
Sector
Technology
Industry
Software - Application
Stock Style Box
Small Growth
Total Number of Employees
5,406
Website
https://www.pega.com

Competitors

Valuation

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Metric
PEGA
MSFT
NOW
Price/Earnings (Normalized)
 23.2836.3864.18
Price/Book Value
 13.7012.3419.20
Price/Sales
 3.7313.2616.51
Price/Cash Flow
 17.8728.2141.53
Price/Earnings
PEGA
MSFT
NOW

Financial Strength

Metric
PEGA
MSFT
NOW
Quick Ratio
 0.971.020.91
Current Ratio
 1.011.221.05
Interest Coverage
 13.3341.4938.58
Quick Ratio
PEGA
MSFT
NOW

Profitability

Metric
PEGA
MSFT
NOW
Return on Assets (Normalized)
 17.35%19.65%15.52%
Return on Equity (Normalized)
 96.20%38.71%34.41%
Return on Invested Capital (Normalized)
 27.19%28.79%23.41%
Return on Assets
PEGA
MSFT
NOW
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