Investors should take note of NASDAQ:PEGA, a growth stock that remains attractively priced.

Last update: Apr 3, 2024

Discover PEGASYSTEMS INC (NASDAQ:PEGA), an undervalued growth gem identified by our stock screener. NASDAQ:PEGA is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

Analyzing Growth Metrics

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:PEGA was assigned a score of 8 for growth:

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

Valuation Examination for NASDAQ:PEGA

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:PEGA scores 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 81.30% 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 79.14% 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 73.74% of the companies in the same industry.
82.37% of the companies in the same industry are more expensive than PEGA, based on the Price/Free Cash Flow ratio.
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.

What does the Health looks like for NASDAQ:PEGA

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:PEGA has earned a 5 out of 10:

An Altman-Z score of 4.23 indicates that PEGA is not in any danger for bankruptcy at the moment.
PEGA's Altman-Z score of 4.23 is fine compared to the rest of the industry. PEGA outperforms 63.67% 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 better Debt to FCF ratio (2.48) than 70.14% 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.

Looking at the Profitability

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 has a better Return On Assets (4.49%) than 80.58% of its industry peers.
With an excellent Return On Equity value of 19.15%, PEGA belongs to the best of the industry, outperforming 91.37% of the companies in the same industry.
The Return On Invested Capital of PEGA (7.81%) is better than 84.89% of its industry peers.
The Profit Margin of PEGA (4.73%) is better than 77.70% of its industry peers.
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 78.06% of its industry peers.
With a decent Gross Margin value of 73.58%, PEGA is doing good in the industry, outperforming 65.83% of the companies in the same industry.
PEGA's Gross Margin has improved in the last couple of years.

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

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

Disclaimer

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.