Progress Software (PRGS) Could Be 23% Undervalued Following Earnings And Overseas Surprises

Progress Software earnings and international trends come into focus

Progress Software (PRGS) has drawn fresh attention after its latest earnings report, which showed higher revenue and net income year over year, alongside mixed but surprising international performance in Latin America and Asia Pacific.

See our latest analysis for Progress Software.

Beyond the earnings beat, Progress Software's share price has reacted sharply, with a 7 day share price return of 16.77% and 30 day gain of 25.03% helping to offset a year to date decline of 4.53%. However, the 1 year total shareholder return is still down 25.64%, so recent momentum is rebuilding from a weaker longer term base as investors weigh the latest buyback activity, new index inclusions and fresh AI related product news.

If the AI theme around Progress Software has your attention, it can be useful to see what else is moving in this space by scanning 62 profitable AI stocks that aren't just burning cash

Bulls view Progress Software as a discounted AI infrastructure play after the recent jump, while bears point to modest growth and a weaker long term return record. Which side do the current valuation markers lean toward?

Most Popular Narrative: 22.9% Undervalued

On the most followed narrative, Progress Software's fair value of $50.83 sits well above the last close at $39.21. This frames the current discount in the context of future cash flows and earnings power rather than short term share price swings.

The successful integration of ShareFile has significantly boosted ARR, revenue, and expense savings, which could indicate strong future revenue growth and improved net margins due to operational efficiencies. The strategic focus on SaaS acquisitions, exemplified by ShareFile, allows Progress Software to potentially increase recurring revenue, enhancing revenue predictability and stability over time.

Read the complete narrative.

Want to see what sits behind that bullish view on ShareFile and SaaS deals? The narrative leans on steady top line assumptions, slimmer margins and a richer future earnings multiple tied to Progress Software's acquisition strategy and recurring revenue mix. The trade off between slower earnings and a higher P/E is central to how this fair value is built.

Result: Fair Value of $50.83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Progress Software's heavy reliance on SaaS acquisitions, along with the execution risk around integrating assets like ShareFile, could pressure margins and weaken the bullish AI narrative.

Find out about the key risks to this Progress Software narrative.

Next Steps

With sentiment on Progress Software split between concern and optimism, this is your cue to review the numbers yourself and quickly form your own view by weighing its 3 key rewards and 2 important warning signs.

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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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