NASDAQ:PEGA: a strong growth stock preparing for the next leg up?.

Growth investors are on the lookout for stocks displaying robust revenue and EPS growth. In this analysis, we'll assess whether PEGASYSTEMS INC (NASDAQ:PEGA) aligns with growth investing criteria, especially as it consolidates and signals a possible breakout. As always, investors should conduct their own research, but PEGASYSTEMS INC has surfaced on our radar for growth with base formation, warranting further examination.

How do we evaluate the Growth for NASDAQ:PEGA?

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NASDAQ:PEGA scores a 8 out of 10:

• The Earnings Per Share has grown by an impressive 255.07% over the past year.
• The Earnings Per Share has been growing by 30.80% on average over the past years. This is a very strong growth
• PEGA shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.71%.
• The Revenue has been growing by 9.95% on average over the past years. This is quite good.
• The Earnings Per Share is expected to grow by 14.56% on average over the next years. This is quite good.
• Based on estimates for the next years, PEGA will show a quite strong growth in Revenue. The Revenue will grow by 12.56% on average per year.
• The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

Health Insights: NASDAQ:PEGA

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:PEGA, the assigned 5 reflects its health status:

• PEGA has an Altman-Z score of 4.22. This indicates that PEGA is financially healthy and has little risk of bankruptcy at the moment.
• With a decent Altman-Z score value of 4.22, PEGA is doing good in the industry, outperforming 64.16% 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.
• Even though the debt/equity ratio score it not favorable for PEGA, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

Evaluating Profitability: NASDAQ:PEGA

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 80.65% of its industry peers.
• PEGA's Return On Equity of 19.15% is amongst the best of the industry. PEGA outperforms 91.04% of its industry peers.
• PEGA's Return On Invested Capital of 7.81% is amongst the best of the industry. PEGA outperforms 85.30% of its industry peers.
• Looking at the Profit Margin, with a value of 4.73%, PEGA is in the better half of the industry, outperforming 77.78% of the companies in the same industry.
• PEGA's Profit Margin has improved in the last couple of years.
• PEGA's Operating Margin of 7.17% is fine compared to the rest of the industry. PEGA outperforms 77.78% of its industry peers.
• The Gross Margin of PEGA (73.58%) is better than 64.87% of its industry peers.
• In the last couple of years the Gross Margin of PEGA has grown nicely.

Looking at the Setup

Besides the Technical Rating, ChartMill also assign a Setup Rating to every stock. This setup score also ranges from 0 to 10 and determines to which extend the stock is consolidating. This is achieved by evaluating multiple short term technical indicators. NASDAQ:PEGA currently has a 7 as setup rating:

Besides having an excellent technical rating, PEGA also presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. A pullback is taking place, which may present a nice opportunity for an entry. There is a support zone below the current price at 62.03, a Stop Loss order could be placed below this zone.

Every day, new Strong Growth stocks can be found on ChartMill in our Strong Growth screener.

Check the latest full fundamental report of PEGA for a complete fundamental analysis.

For an up to date full technical analysis you can check the technical report of PEGA

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.