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PEGASYSTEMS INC (PEGA) Stock Fundamental Analysis

NASDAQ:PEGA - Nasdaq - US7055731035 - Common Stock - Currency: USD

108.58  +0.65 (+0.6%)

After market: 108.58 0 (0%)

Fundamental Rating

6

PEGA gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 284 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 not valued too expensively and it also shows a decent growth rate.


Dividend Valuation Growth Profitability Health

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6

1. Profitability

1.1 Basic Checks

PEGA had positive earnings in the past year.
In the past year PEGA had a positive cash flow from operations.
In the past 5 years PEGA reported 4 times negative net income.
In multiple years PEGA reported negative operating cash flow during the last 5 years.
PEGA Yearly Net Income VS EBIT VS OCF VS FCFPEGA Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 100M -100M 200M -200M -300M

1.2 Ratios

PEGA has a better Return On Assets (7.77%) than 81.95% of its industry peers.
PEGA has a Return On Equity of 25.95%. This is amongst the best in the industry. PEGA outperforms 89.53% of its industry peers.
PEGA has a Return On Invested Capital of 22.05%. This is amongst the best in the industry. PEGA outperforms 94.58% of its industry peers.
Industry RankSector Rank
ROA 7.77%
ROE 25.95%
ROIC 22.05%
ROA(3y)-8.31%
ROA(5y)-7.59%
ROE(3y)-86.73%
ROE(5y)-57.66%
ROIC(3y)N/A
ROIC(5y)N/A
PEGA Yearly ROA, ROE, ROICPEGA Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 -50 -100 -150 -200 -250

1.3 Margins

With a decent Profit Margin value of 8.29%, PEGA is doing good in the industry, outperforming 74.73% of the companies in the same industry.
PEGA's Profit Margin has improved in the last couple of years.
PEGA has a better Operating Margin (11.63%) than 79.06% of its industry peers.
PEGA has a Gross Margin of 74.40%. This is in the better half of the industry: PEGA outperforms 64.98% of its industry peers.
PEGA's Gross Margin has improved in the last couple of years.
Industry RankSector Rank
OM 11.63%
PM (TTM) 8.29%
GM 74.4%
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5Y31.83%
GM growth 3Y1.95%
GM growth 5Y2.15%
PEGA Yearly Profit, Operating, Gross MarginsPEGA Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 20 -20 40 60

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6

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so PEGA is creating value.
Compared to 1 year ago, PEGA has more shares outstanding
The number of shares outstanding for PEGA has been increased compared to 5 years ago.
Compared to 1 year ago, PEGA has an improved debt to assets ratio.
PEGA Yearly Shares OutstandingPEGA Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 20M 40M 60M 80M
PEGA Yearly Total Debt VS Total AssetsPEGA Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 500M 1B 1.5B

2.2 Solvency

An Altman-Z score of 6.36 indicates that PEGA is not in any danger for bankruptcy at the moment.
PEGA has a better Altman-Z score (6.36) than 70.04% of its industry peers.
PEGA has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
Industry RankSector Rank
Debt/Equity 0
Debt/FCF 1.55
Altman-Z 6.36
ROIC/WACC2.08
WACC10.62%
PEGA Yearly LT Debt VS Equity VS FCFPEGA Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 200M 400M 600M

2.3 Liquidity

PEGA has a Current Ratio of 1.09. 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 1.09, PEGA is doing worse than 72.20% of the companies in the same industry.
PEGA has a Quick Ratio of 1.09. This is a normal value and indicates that PEGA is financially healthy and should not expect problems in meeting its short term obligations.
PEGA has a worse Quick ratio (1.09) than 71.12% of its industry peers.
Industry RankSector Rank
Current Ratio 1.09
Quick Ratio 1.09
PEGA Yearly Current Assets VS Current LiabilitesPEGA Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 200M 400M 600M 800M 1B

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5

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 110.67% 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.
PEGA shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.28%.
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)110.67%
EPS 3YN/A
EPS 5Y30.8%
EPS Q2Q%-11.36%
Revenue 1Y (TTM)9.28%
Revenue growth 3Y12.08%
Revenue growth 5Y9.95%
Sales Q2Q%-2.87%

3.2 Future

The Earnings Per Share is expected to grow by 4.34% on average over the next years.
PEGA is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.70% yearly.
EPS Next Y19.93%
EPS Next 2Y16.1%
EPS Next 3Y12.79%
EPS Next 5Y4.34%
Revenue Next Year7.57%
Revenue Next 2Y7.3%
Revenue Next 3Y7.39%
Revenue Next 5Y5.7%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
PEGA Yearly Revenue VS EstimatesPEGA Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 500M 1B 1.5B 2B 2.5B
PEGA Yearly EPS VS EstimatesPEGA Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 0 1 2 3 4 5

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5

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 34.36, which means the current valuation is very expensive for PEGA.
PEGA's Price/Earnings ratio is a bit cheaper when compared to the industry. PEGA is cheaper than 70.04% of the companies in the same industry.
PEGA is valuated rather expensively when we compare the Price/Earnings ratio to 28.47, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 32.88, PEGA can be considered very expensive at the moment.
PEGA's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. PEGA is cheaper than 67.87% of the companies in the same industry.
PEGA's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 92.74.
Industry RankSector Rank
PE 34.36
Fwd PE 32.88
PEGA Price Earnings VS Forward Price EarningsPEGA Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60 80

4.2 Price Multiples

PEGA's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PEGA is cheaper than 69.68% of the companies in the same industry.
77.98% of the companies in the same industry are more expensive than PEGA, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 28.81
EV/EBITDA 45.47
PEGA Per share dataPEGA EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 5 10 15

4.3 Compensation for Growth

The 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.
A more expensive valuation may be justified as PEGA's earnings are expected to grow with 12.79% in the coming years.
PEG (NY)1.72
PEG (5Y)1.12
EPS Next 2Y16.1%
EPS Next 3Y12.79%

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5

5. Dividend

5.1 Amount

With a yearly dividend of 0.11%, PEGA is not a good candidate for dividend investing.
PEGA's Dividend Yield is rather good when compared to the industry average which is at 11.93. PEGA pays more dividend than 89.17% of the companies in the same industry.
With a Dividend Yield of 0.11, PEGA pays less dividend than the S&P500 average, which is at 2.28.
Industry RankSector Rank
Dividend Yield 0.11%

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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-0.03%
Div Incr Years0
Div Non Decr Years15
PEGA Yearly Dividends per sharePEGA Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.02 0.04 0.06 0.08 0.1

5.3 Sustainability

8.22% of the earnings are spent on dividend by PEGA. This is a low number and sustainable payout ratio.
DP8.22%
EPS Next 2Y16.1%
EPS Next 3Y12.79%
PEGA Yearly Income VS Free CF VS DividendPEGA Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 100M -100M 200M -200M -300M
PEGA Dividend Payout.PEGA Dividend Payout, showing the Payout Ratio.PEGA Dividend Payout.PayoutRetained Earnings

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PEGASYSTEMS INC

NASDAQ:PEGA (2/4/2025, 8:00:42 PM)

After market: 108.58 0 (0%)

108.58

+0.65 (+0.6%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)10-23 2024-10-23/amc
Earnings (Next)02-12 2025-02-12/amc
Inst Owners39.64%
Inst Owner Change0.21%
Ins Owners47.48%
Ins Owner Change-0.05%
Market Cap9.31B
Analysts82.35
Price Target106.83 (-1.61%)
Short Float %2.55%
Short Ratio1.82
Dividend
Industry RankSector Rank
Dividend Yield 0.11%
Yearly Dividend0.12
Dividend Growth(5Y)-0.03%
DP8.22%
Div Incr Years0
Div Non Decr Years15
Ex-Date01-02 2025-01-02 (0.03)
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)54.15%
Min EPS beat(2)6.36%
Max EPS beat(2)101.94%
EPS beat(4)4
Avg EPS beat(4)48.13%
Min EPS beat(4)6.36%
Max EPS beat(4)101.94%
EPS beat(8)6
Avg EPS beat(8)1156.87%
EPS beat(12)7
Avg EPS beat(12)729.7%
EPS beat(16)9
Avg EPS beat(16)569.22%
Revenue beat(2)1
Avg Revenue beat(2)2.48%
Min Revenue beat(2)-1.97%
Max Revenue beat(2)6.93%
Revenue beat(4)2
Avg Revenue beat(4)3.38%
Min Revenue beat(4)-3.84%
Max Revenue beat(4)12.41%
Revenue beat(8)4
Avg Revenue beat(8)3.2%
Revenue beat(12)5
Avg Revenue beat(12)-0.92%
Revenue beat(16)7
Avg Revenue beat(16)-0.54%
PT rev (1m)7%
PT rev (3m)24.13%
EPS NQ rev (1m)-0.85%
EPS NQ rev (3m)-0.79%
EPS NY rev (1m)-0.02%
EPS NY rev (3m)0.14%
Revenue NQ rev (1m)-0.75%
Revenue NQ rev (3m)-0.75%
Revenue NY rev (1m)-0.26%
Revenue NY rev (3m)-0.26%
Valuation
Industry RankSector Rank
PE 34.36
Fwd PE 32.88
P/S 6.29
P/FCF 28.81
P/OCF 28.16
P/B 19.68
P/tB 24.06
EV/EBITDA 45.47
EPS(TTM)3.16
EY2.91%
EPS(NY)3.3
Fwd EY3.04%
FCF(TTM)3.77
FCFY3.47%
OCF(TTM)3.86
OCFY3.55%
SpS17.27
BVpS5.52
TBVpS4.51
PEG (NY)1.72
PEG (5Y)1.12
Profitability
Industry RankSector Rank
ROA 7.77%
ROE 25.95%
ROCE 31.03%
ROIC 22.05%
ROICexc N/A
ROICexgc N/A
OM 11.63%
PM (TTM) 8.29%
GM 74.4%
FCFM 21.83%
ROA(3y)-8.31%
ROA(5y)-7.59%
ROE(3y)-86.73%
ROE(5y)-57.66%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5Y31.83%
GM growth 3Y1.95%
GM growth 5Y2.15%
F-Score6
Asset Turnover0.94
Health
Industry RankSector Rank
Debt/Equity 0
Debt/FCF 1.55
Debt/EBITDA 0
Cap/Depr 41.5%
Cap/Sales 0.5%
Interest Coverage 250
Cash Conversion 174.01%
Profit Quality 263.25%
Current Ratio 1.09
Quick Ratio 1.09
Altman-Z 6.36
F-Score6
WACC10.62%
ROIC/WACC2.08
Cap/Depr(3y)104.84%
Cap/Depr(5y)96.66%
Cap/Sales(3y)1.57%
Cap/Sales(5y)1.68%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)110.67%
EPS 3YN/A
EPS 5Y30.8%
EPS Q2Q%-11.36%
EPS Next Y19.93%
EPS Next 2Y16.1%
EPS Next 3Y12.79%
EPS Next 5Y4.34%
Revenue 1Y (TTM)9.28%
Revenue growth 3Y12.08%
Revenue growth 5Y9.95%
Sales Q2Q%-2.87%
Revenue Next Year7.57%
Revenue Next 2Y7.3%
Revenue Next 3Y7.39%
Revenue Next 5Y5.7%
EBIT growth 1Y5638.07%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year100.33%
EBIT Next 3Y37.1%
EBIT Next 5Y30.81%
FCF growth 1Y5997.74%
FCF growth 3YN/A
FCF growth 5Y16.79%
OCF growth 1Y966.39%
OCF growth 3YN/A
OCF growth 5Y15.84%