PEGASYSTEMS INC (PEGA)
US7055731035 - Common Stock
Overall PEGA gets a fundamental rating of 6 out of 10. We evaluated PEGA against 276 industry peers in the Software industry. Both the profitability and the financial health of PEGA get a neutral evaluation. Nothing too spectacular is happening here. PEGA is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! With these ratings, PEGA could be worth investigating further for growth investing!.
1. Profitability
1.1 Basic Checks
In the past year PEGA was profitable.
PEGA had a positive operating cash flow in the past year.
In the past 5 years PEGA reported 4 times negative net income.
The reported operating cash flow has been mixed in the past 5 years: PEGA reported negative operating cash flow in multiple years.
1.2 Ratios
With a decent Return On Assets value of 4.49%, PEGA is doing good in the industry, outperforming 79.56% of the companies in the same industry.
With an excellent Return On Equity value of 19.15%, PEGA belongs to the best of the industry, outperforming 90.51% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 7.81%, PEGA belongs to the top of the industry, outperforming 85.77% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.49% | ||
| ROE | 19.15% | ||
| ROIC | 7.81% |
ROA(3y)-8.31%
ROA(5y)-7.59%
ROE(3y)-86.73%
ROE(5y)-57.66%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
With a decent Profit Margin value of 4.73%, PEGA is doing good in the industry, outperforming 75.91% of the companies in the same industry.
PEGA's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 7.17%, PEGA is doing good in the industry, outperforming 78.83% of the companies in the same industry.
The Gross Margin of PEGA (73.58%) is better than 64.96% of its industry peers.
PEGA's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.17% | ||
| PM (TTM) | 4.73% | ||
| GM | 73.58% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5Y31.83%
GM growth 3Y1.95%
GM growth 5Y2.15%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so PEGA is destroying value.
The number of shares outstanding for PEGA has been increased compared to 1 year ago.
PEGA has more shares outstanding than it did 5 years ago.
PEGA has a better debt/assets ratio than last year.
2.2 Solvency
PEGA has an Altman-Z score of 4.21. This indicates that PEGA is financially healthy and has little risk of bankruptcy at the moment.
PEGA has a better Altman-Z score (4.21) than 63.87% of its industry peers.
PEGA has a debt to FCF ratio of 2.48. This is a good value and a sign of high solvency as PEGA would need 2.48 years to pay back of 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 68.61% of its industry peers.
A Debt/Equity ratio of 1.41 is on the high side and indicates that PEGA has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.41, PEGA is doing worse than 77.37% of the companies in the same industry.
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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.41 | ||
| Debt/FCF | 2.48 | ||
| Altman-Z | 4.21 |
ROIC/WACC0.82
WACC9.51%
2.3 Liquidity
PEGA has a Current Ratio of 1.78. This is a normal value and indicates that PEGA is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.78, PEGA is in line with its industry, outperforming 53.28% of the companies in the same industry.
A Quick Ratio of 1.78 indicates that PEGA should not have too much problems paying its short term obligations.
PEGA has a Quick ratio of 1.78. This is comparable to the rest of the industry: PEGA outperforms 53.65% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.78 | ||
| Quick Ratio | 1.78 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 255.07% over the past year.
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.
The Revenue has grown by 8.71% in the past year. This is quite good.
Measured over the past years, PEGA shows a quite strong growth in Revenue. The Revenue has been growing by 9.95% on average per year.
EPS 1Y (TTM)255.07%
EPS 3YN/A
EPS 5Y30.8%
EPS growth Q2Q115.85%
Revenue 1Y (TTM)8.71%
Revenue growth 3Y12.08%
Revenue growth 5Y9.95%
Revenue growth Q2Q19.6%
3.2 Future
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.
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.
EPS Next Y14.8%
EPS Next 2Y15.14%
EPS Next 3Y15.19%
EPS Next 5Y14.56%
Revenue Next Year9.29%
Revenue Next 2Y8.99%
Revenue Next 3Y9.74%
Revenue Next 5Y12.56%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
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.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 25.22, which means the current valuation is very expensive for PEGA.
Based on the Price/Earnings ratio, PEGA is valued cheaper than 80.66% of the companies in the same industry.
PEGA's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 24.84.
With a Price/Forward Earnings ratio of 21.97, PEGA is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PEGA indicates a rather cheap valuation: PEGA is cheaper than 81.39% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.35. PEGA is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.22 | ||
| Fwd PE | 21.97 |
4.2 Price Multiples
73.36% of the companies in the same industry are more expensive than PEGA, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, PEGA is valued cheaply inside the industry as 82.12% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.8 | ||
| EV/EBITDA | 41.75 |
4.3 Compensation for Growth
PEGA's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of PEGA may justify a higher PE ratio.
PEGA's earnings are expected to grow with 15.19% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.7
PEG (5Y)0.82
EPS Next 2Y15.14%
EPS Next 3Y15.19%
5. Dividend
5.1 Amount
PEGA has a yearly dividend return of 0.20%, which is pretty low.
PEGA's Dividend Yield is rather good when compared to the industry average which is at 11.45. PEGA pays more dividend than 89.78% of the companies in the same industry.
With a Dividend Yield of 0.20, PEGA pays less dividend than the S&P500 average, which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.2% |
5.2 History
The dividend of PEGA decreases each year by -0.03%.
PEGA has been paying a dividend for at least 10 years, so it has a reliable track record.
PEGA has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)-0.03%
Div Incr Years0
Div Non Decr Years15
5.3 Sustainability
PEGA pays out 14.70% of its income as dividend. This is a sustainable payout ratio.
DP14.7%
EPS Next 2Y15.14%
EPS Next 3Y15.19%
PEGASYSTEMS INC
NASDAQ:PEGA (4/26/2024, 7:09:27 PM)
After market: 61.8 0 (0%)61.8
+2.72 (+4.6%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap5.19B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.2% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(4)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
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Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.22 | ||
| Fwd PE | 21.97 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.7
PEG (5Y)0.82
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.49% | ||
| ROE | 19.15% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 7.17% | ||
| PM (TTM) | 4.73% | ||
| GM | 73.58% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.95
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.41 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.78 | ||
| Quick Ratio | 1.78 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)255.07%
EPS 3YN/A
EPS 5Y
EPS growth Q2Q
EPS Next Y14.8%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)8.71%
Revenue growth 3Y12.08%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y