Is There Now An Opportunity In Progress Software (PRGS) After A 42% One Year Pullback?

• Investors may be wondering whether Progress Software's current share price reflects its true value, or if the recent weakness is opening up an opportunity.
• The stock closed at US$31.29, with returns of an 8.8% decline over 7 days, a 22.4% decline over 30 days, a 23.8% decline year to date, and a 42.5% decline over 1 year. These moves may have shifted how the market views its risk and reward trade off.
• Recent headlines have focused on Progress Software's role as a software provider and how investors are reassessing companies in this part of the market. This context helps explain why some shareholders may be rethinking their expectations and why new investors are starting to recheck the price.
• Even so, the company currently has a valuation score of 5/6. This sets up a closer look at traditional methods like discounted cash flow (DCF) and multiples, followed by a broader view later in the article on how to judge whether that valuation really matches the long term story.

Find out why Progress Software's -42.5% return over the last year is lagging behind its peers.

Approach 1: Progress Software Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today’s value.

For Progress Software, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is reported at $228.5 million. Analyst and extrapolated projections in the model show annual free cash flow figures such as $309.2 million in 2026 and $334.4 million in 2030, with further years extending out to 2035, all expressed in US$.

When those projected cash flows are discounted back and summed, the DCF model produces an estimated intrinsic value of $83.53 per share. Compared with the recent share price of $31.29, this implies a 62.5% discount, meaning the shares screen as materially undervalued on this specific cash flow outlook.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Progress Software is undervalued by 62.5%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Progress Software.

Approach 2: Progress Software Price vs Earnings (P/E)

For a profitable company like Progress Software, the P/E ratio is a straightforward way to relate what you pay for each share to the earnings that support it. Investors usually look for a P/E that lines up with their expectations for future growth and the risks they see in the business. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk often points to a lower “normal” range.

Progress Software currently trades on a P/E of 18.0x. This sits below the broader Software industry average P/E of 29.4x and also below the peer group average of 38.4x. Simply Wall St’s proprietary “Fair Ratio” for Progress Software is 21.9x. This reflects an estimate of what the P/E could be given factors such as earnings growth profile, industry, profit margin, market cap and company specific risks.

The Fair Ratio aims to be more tailored than a simple comparison to peers or the overall industry because it adjusts for those company level characteristics rather than assuming all software stocks deserve the same multiple. Comparing Progress Software’s current P/E of 18.0x with the Fair Ratio of 21.9x suggests the shares are trading below this modelled range.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Progress Software Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in as your way of attaching a clear story to the numbers, linking your view on Progress Software’s future revenue, earnings and margins to a fair value that you can compare with today’s price.

A Narrative on Simply Wall St’s Community page is your own structured storyline about the company, where you spell out why you think certain catalysts matter, how that feeds into a forecast, and what fair value that forecast supports, all in a format that is easy to adjust as your view evolves.

Because Narratives connect the story directly to a set of financial assumptions, they help you decide how to act. For example, you might set a fair value such as US$45.00 or US$83.00 for Progress Software and then watch how the current share price compares with the level you think is justified.

As new information arrives, like updates to analyst fair values around US$65.50 or fresh commentary on AI products, the Narrative tools on Simply Wall St update the numbers in the background so your story and the implied fair value stay in sync without you rebuilding a full model each time.

Do you think there's more to the story for Progress Software? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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