PROGRESS SOFTWARE CORP (PRGS) Stock Fundamental Analysis
NASDAQ:PRGS - Nasdaq - US7433121008 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to PRGS. PRGS was compared to 282 industry peers in the Software industry. PRGS scores excellent on profitability, but there are concerns on its financial health. PRGS may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
PRGS had positive earnings in the past year.
PRGS had a positive operating cash flow in the past year.
In the past 5 years PRGS has always been profitable.
Each year in the past 5 years PRGS had a positive operating cash flow.
1.2 Ratios
PRGS has a better Return On Assets (2.30%) than 70.21% of its industry peers.
With an excellent Return On Equity value of 13.14%, PRGS belongs to the best of the industry, outperforming 81.21% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 6.36%, PRGS is in the better half of the industry, outperforming 77.66% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for PRGS is below the industry average of 12.26%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.3% | ||
| ROE | 13.14% | ||
| ROIC | 6.36% |
ROA(3y)4.61%
ROA(5y)5.45%
ROE(3y)18.24%
ROE(5y)19.35%
ROIC(3y)7.93%
ROIC(5y)9.13%
1.3 Margins
PRGS's Profit Margin of 7.03% is fine compared to the rest of the industry. PRGS outperforms 74.11% of its industry peers.
In the last couple of years the Profit Margin of PRGS has grown nicely.
The Operating Margin of PRGS (19.94%) is better than 86.88% of its industry peers.
PRGS's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 82.16%, PRGS belongs to the top of the industry, outperforming 88.65% of the companies in the same industry.
PRGS's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.94% | ||
| PM (TTM) | 7.03% | ||
| GM | 82.16% |
OM growth 3Y-4.3%
OM growth 5Y3.62%
PM growth 3Y-14.93%
PM growth 5Y7.3%
GM growth 3Y-1.01%
GM growth 5Y0.21%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so PRGS is still creating some value.
The number of shares outstanding for PRGS has been reduced compared to 1 year ago.
The number of shares outstanding for PRGS has been reduced compared to 5 years ago.
The debt/assets ratio for PRGS is higher compared to a year ago.
2.2 Solvency
PRGS has an Altman-Z score of 1.25. This is a bad value and indicates that PRGS is not financially healthy and even has some risk of bankruptcy.
PRGS has a worse Altman-Z score (1.25) than 62.06% of its industry peers.
PRGS has a debt to FCF ratio of 7.35. This is a slightly negative value and a sign of low solvency as PRGS would need 7.35 years to pay back of all of its debts.
With a Debt to FCF ratio value of 7.35, PRGS perfoms like the industry average, outperforming 52.84% of the companies in the same industry.
A Debt/Equity ratio of 3.47 is on the high side and indicates that PRGS has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 3.47, PRGS is doing worse than 82.27% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.47 | ||
| Debt/FCF | 7.35 | ||
| Altman-Z | 1.25 |
ROIC/WACC0.85
WACC7.45%
2.3 Liquidity
A Current Ratio of 0.79 indicates that PRGS may have some problems paying its short term obligations.
PRGS has a Current ratio of 0.79. This is amonst the worse of the industry: PRGS underperforms 81.56% of its industry peers.
A Quick Ratio of 0.79 indicates that PRGS may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.79, PRGS is doing worse than 81.56% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.79 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 19.37% over the past year.
Measured over the past years, PRGS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 12.88% on average per year.
Looking at the last year, PRGS shows a quite strong growth in Revenue. The Revenue has grown by 8.49% in the last year.
The Revenue has been growing by 12.76% on average over the past years. This is quite good.
EPS 1Y (TTM)19.37%
EPS 3Y8.4%
EPS 5Y12.88%
EPS Q2Q%28.44%
Revenue 1Y (TTM)8.49%
Revenue growth 3Y12.35%
Revenue growth 5Y12.76%
Sales Q2Q%35.57%
3.2 Future
PRGS is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.24% yearly.
Based on estimates for the next years, PRGS will show a small growth in Revenue. The Revenue will grow by 7.74% on average per year.
EPS Next Y9.58%
EPS Next 2Y8.8%
EPS Next 3Y7.24%
EPS Next 5YN/A
Revenue Next Year28.7%
Revenue Next 2Y14.82%
Revenue Next 3Y10.05%
Revenue Next 5Y7.74%
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.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 10.27 indicates a reasonable valuation of PRGS.
Compared to the rest of the industry, the Price/Earnings ratio of PRGS indicates a rather cheap valuation: PRGS is cheaper than 92.55% of the companies listed in the same industry.
PRGS is valuated cheaply when we compare the Price/Earnings ratio to 27.28, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 9.33, which indicates a very decent valuation of PRGS.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PRGS indicates a rather cheap valuation: PRGS is cheaper than 93.26% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of PRGS to the average of the S&P500 Index (21.76), we can say PRGS is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.27 | ||
| Fwd PE | 9.33 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PRGS indicates a rather cheap valuation: PRGS is cheaper than 87.59% of the companies listed in the same industry.
PRGS's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PRGS is cheaper than 94.33% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.5 | ||
| EV/EBITDA | 13.42 |
4.3 Compensation for Growth
PRGS's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
PRGS has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.07
PEG (5Y)0.8
EPS Next 2Y8.8%
EPS Next 3Y7.24%
5. Dividend
5.1 Amount
PRGS has a Yearly Dividend Yield of 1.26%. Purely for dividend investing, there may be better candidates out there.
PRGS's Dividend Yield is rather good when compared to the industry average which is at 16.21. PRGS pays more dividend than 93.97% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, PRGS's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.26% |
5.2 History
The dividend of PRGS has a limited annual growth rate of 3.19%.
PRGS has been paying a dividend for over 5 years, so it has already some track record.
Dividend Growth(5Y)3.19%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
PRGS pays out 41.67% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of PRGS is growing, but earnings are growing more, so the dividend growth is sustainable.
DP41.67%
EPS Next 2Y8.8%
EPS Next 3Y7.24%
54.45
+0.55 (+1.02%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners117.99%
Inst Owner Change-1.86%
Ins Owners1.64%
Ins Owner Change4.75%
Market Cap2.34B
Analysts83.08
Price Target74.29 (36.44%)
Short Float %13.24%
Short Ratio11.33
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.26% |
Yearly Dividend0.72
Dividend Growth(5Y)3.19%
DP41.67%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)14.41%
Min EPS beat(2)7.29%
Max EPS beat(2)21.52%
EPS beat(4)4
Avg EPS beat(4)12.37%
Min EPS beat(4)7.29%
Max EPS beat(4)21.52%
EPS beat(8)8
Avg EPS beat(8)11%
EPS beat(12)12
Avg EPS beat(12)9.03%
EPS beat(16)16
Avg EPS beat(16)12.15%
Revenue beat(2)0
Avg Revenue beat(2)-0.61%
Min Revenue beat(2)-0.97%
Max Revenue beat(2)-0.24%
Revenue beat(4)1
Avg Revenue beat(4)0.08%
Min Revenue beat(4)-0.97%
Max Revenue beat(4)1.91%
Revenue beat(8)2
Avg Revenue beat(8)0.3%
Revenue beat(12)3
Avg Revenue beat(12)-0.19%
Revenue beat(16)6
Avg Revenue beat(16)0.53%
PT rev (1m)0%
PT rev (3m)-2.46%
EPS NQ rev (1m)-0.11%
EPS NQ rev (3m)11.2%
EPS NY rev (1m)0%
EPS NY rev (3m)4.71%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.6%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.27 | ||
| Fwd PE | 9.33 | ||
| P/S | 2.9 | ||
| P/FCF | 11.5 | ||
| P/OCF | 11.16 | ||
| P/B | 5.43 | ||
| P/tB | N/A | ||
| EV/EBITDA | 13.42 |
EPS(TTM)5.3
EY9.73%
EPS(NY)5.84
Fwd EY10.72%
FCF(TTM)4.74
FCFY8.7%
OCF(TTM)4.88
OCFY8.96%
SpS18.75
BVpS10.04
TBVpS-35.98
PEG (NY)1.07
PEG (5Y)0.8
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.3% | ||
| ROE | 13.14% | ||
| ROCE | 7.91% | ||
| ROIC | 6.36% | ||
| ROICexc | 6.77% | ||
| ROICexgc | N/A | ||
| OM | 19.94% | ||
| PM (TTM) | 7.03% | ||
| GM | 82.16% | ||
| FCFM | 25.26% |
ROA(3y)4.61%
ROA(5y)5.45%
ROE(3y)18.24%
ROE(5y)19.35%
ROIC(3y)7.93%
ROIC(5y)9.13%
ROICexc(3y)9.33%
ROICexc(5y)10.7%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)9.87%
ROCE(5y)11.36%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y-17.49%
ROICexc growth 5Y-12.26%
OM growth 3Y-4.3%
OM growth 5Y3.62%
PM growth 3Y-14.93%
PM growth 5Y7.3%
GM growth 3Y-1.01%
GM growth 5Y0.21%
F-Score5
Asset Turnover0.33
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.47 | ||
| Debt/FCF | 7.35 | ||
| Debt/EBITDA | 5.44 | ||
| Cap/Depr | 5.42% | ||
| Cap/Sales | 0.77% | ||
| Interest Coverage | 5.68 | ||
| Cash Conversion | 76.32% | ||
| Profit Quality | 359.06% | ||
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.79 | ||
| Altman-Z | 1.25 |
F-Score5
WACC7.45%
ROIC/WACC0.85
Cap/Depr(3y)6.21%
Cap/Depr(5y)9.24%
Cap/Sales(3y)0.84%
Cap/Sales(5y)0.97%
Profit Quality(3y)245.65%
Profit Quality(5y)226.43%
High Growth Momentum
Growth
EPS 1Y (TTM)19.37%
EPS 3Y8.4%
EPS 5Y12.88%
EPS Q2Q%28.44%
EPS Next Y9.58%
EPS Next 2Y8.8%
EPS Next 3Y7.24%
EPS Next 5YN/A
Revenue 1Y (TTM)8.49%
Revenue growth 3Y12.35%
Revenue growth 5Y12.76%
Sales Q2Q%35.57%
Revenue Next Year28.7%
Revenue Next 2Y14.82%
Revenue Next 3Y10.05%
Revenue Next 5Y7.74%
EBIT growth 1Y26.19%
EBIT growth 3Y7.51%
EBIT growth 5Y16.84%
EBIT Next Year74.16%
EBIT Next 3Y20.7%
EBIT Next 5YN/A
FCF growth 1Y7.69%
FCF growth 3Y5.88%
FCF growth 5Y10.63%
OCF growth 1Y7.72%
OCF growth 3Y5.82%
OCF growth 5Y10.48%