NASDAQ:PEGA, a growth stock which is not overvalued.

Uncover the potential of PEGASYSTEMS INC (NASDAQ:PEGA), a growth stock that our stock screener found to be reasonably priced. NASDAQ:PEGA is excelling in growth aspects, maintaining a healthy financial position, and still offers an attractive valuation. We'll examine each aspect in detail.

A Closer Look at Growth for NASDAQ:PEGA

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:PEGA has earned a 8 for growth:

• PEGA shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 255.07%, which is quite impressive.
• Measured over the past years, PEGA shows a very strong growth in Earnings Per Share. The EPS has been growing by 30.80% on average per year.
• Looking at the last year, PEGA shows a quite strong growth in Revenue. The Revenue has grown by 8.71% in the last year.
• The Revenue has been growing by 9.95% on average over the past years. This is quite good.
• Based on estimates for the next years, PEGA will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.56% on average per year.
• The Revenue is expected to grow by 12.56% on average over the next years. This is quite good.
• When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Valuation Assessment of NASDAQ:PEGA

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:PEGA has received a 5 out of 10:

• Compared to the rest of the industry, the Price/Earnings ratio of PEGA indicates a rather cheap valuation: PEGA is cheaper than 80.65% of the companies listed in the same industry.
• PEGA's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. PEGA is cheaper than 79.57% of the companies in the same industry.
• PEGA's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PEGA is cheaper than 73.12% of the companies in the same industry.
• Based on the Price/Free Cash Flow ratio, PEGA is valued cheaply inside the industry as 83.15% of the companies are valued more expensively.
• PEGA has a very decent profitability rating, which may justify a higher PE ratio.
• A more expensive valuation may be justified as PEGA's earnings are expected to grow with 15.19% in the coming years.

Understanding NASDAQ:PEGA's Health

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:PEGA was assigned a score of 5 for health:

• PEGA has an Altman-Z score of 4.34. This indicates that PEGA is financially healthy and has little risk of bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 4.34, PEGA is in the better half of the industry, outperforming 64.52% of the companies in the same industry.
• The Debt to FCF ratio of PEGA is 2.48, which is a good value as it means it would take PEGA, 2.48 years of fcf income to pay off all of its debts.
• PEGA has a Debt to FCF ratio of 2.48. This is in the better half of the industry: PEGA outperforms 70.97% of its industry peers.
• Although PEGA does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

Analyzing Profitability Metrics

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:PEGA has achieved a 6:

• PEGA's Return On Assets of 4.49% is amongst the best of the industry. PEGA outperforms 80.29% of its industry peers.
• PEGA's Return On Equity of 19.15% is amongst the best of the industry. PEGA outperforms 90.32% of its industry peers.
• PEGA has a better Return On Invested Capital (7.81%) than 85.30% of its industry peers.
• PEGA has a Profit Margin of 4.73%. This is in the better half of the industry: PEGA outperforms 77.78% of its industry peers.
• PEGA's Profit Margin has improved in the last couple of years.
• PEGA has a Operating Margin of 7.17%. This is in the better half of the industry: PEGA outperforms 77.42% of its industry peers.
• The Gross Margin of PEGA (73.58%) is better than 65.23% of its industry peers.
• PEGA's Gross Margin has improved in the last couple of years.

More Affordable Growth stocks can be found in our Affordable Growth screener.

Our latest full fundamental report of PEGA contains the most current fundamental analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.