Progress Software (PRGS) Could Be 35% Undervalued As Q2 Earnings Near

Progress Software (PRGS) is drawing attention ahead of its June 30 Q2 earnings release, after Q1 results came in ahead of expectations and the stock recently closed at $28.84 following a 4.3% gain.

See our latest analysis for Progress Software.

Recent trading reflects this anticipation, with Progress Software’s 1 day share price return of 11.2% and 90 day share price return of 19.8% contrasting with a year to date share price decline of 19.3% and 1 year total shareholder return decline of 48.0%. This suggests that short term momentum has picked up while longer term returns remain weak.

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With Progress Software trading at a discount of about 50% to both its analyst price target and one intrinsic value estimate, yet carrying weak multi year returns, you have to ask: is this a reset level worth considering, or is the market already pricing in the company’s future growth?

Most Popular Narrative: 34.8% Undervalued

At a last close of $33.15 versus a narrative fair value of $50.83, Progress Software is framed as materially undervalued, with that gap depending on how investors view its acquisition and AI plans.

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 is built into that $50.83 figure? The narrative refers to modest revenue growth, shifting margins and a richer future earnings multiple. Curious which assumptions really move the fair value?

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 acquisitions and the execution risk around integrating assets like ShareFile could pressure margins and weaken the current narrative that the stock is undervalued.

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

Next Steps

With such mixed sentiment around Progress Software, it makes sense to move quickly, review the numbers yourself and decide where you stand on the balance of risks and rewards, starting with 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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