Progress Software (PRGS) Stock Looks Fairly Priced With Earnings At A Discount

Progress Software stock has retreated over the past three years. On current checks it does not look obviously expensive or obviously cheap, which puts more weight on how investors read the latest moves around its valuation. The recent agreement to acquire Domo for US$400 million adds a fresh piece to that puzzle for anyone weighing what the current share price implies.

• Progress Software shares are down about 34.2% over three years, which suggests investors have become more cautious about the company’s outlook over that period.
• The planned US$400 million cash acquisition of Domo can support the long term story if the assets are integrated and monetised well. It also introduces execution risk and questions about how effectively Progress Software allocates capital.
• On Simply Wall St’s broader valuation checks, Progress Software screens as relatively cheap in most areas, with 5 out of 6 tests pointing to value rather than overpayment.

The stock’s next move may depend on whether the current price already reflects both the Domo deal risks and the potential value that Progress Software appears to offer on these checks.

Progress Software delivered -25.5% returns over the last year. See how this stacks up to the rest of the Software industry.

Does Progress Software Look Fairly Valued on Earnings?

The P/E ratio is a useful way to think about Progress Software because earnings are a key focus for mature software companies that generate meaningful profit.

Progress Software trades on a P/E of about 17.4x, which is well below the broader software industry average of 27.8x and the peer group average of 42.5x. The fair P/E that results from Simply Wall St’s model, at roughly 19.0x, reflects what investors might typically pay for a software company with Progress Software’s mix of margins, scale and risk profile.

That puts the current P/E only slightly under the model’s fair level, suggesting the stock is not pricing in extreme pessimism or optimism. Even with the Domo acquisition agreement in the headlines, the current earnings multiple still lines up reasonably closely with what the model suggests.

Overall, Progress Software appears to be priced at roughly a fair level based on its current P/E multiple.

See what the numbers say about this price — find out in our valuation breakdown.

The Progress Software Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Progress Software pick up where the valuation checks leave off by spelling out which paths for growth, margins and earnings would make the stock worth meaningfully more or less than today’s price. Rather than relying on a single multiple or model output, each Narrative lays out the key assumptions behind its view of fair value, so you can compare those expectations with Progress Software’s actual results as they are reported.

One of the top community narratives on Progress Software: 16% undervalued

"Although the company benefits from surging global requirements for data analytics and scalable infrastructure, an overreliance on M&A for product innovation and portfolio expansion introduces ongoing integration risk..."

Read one of the top narratives on Progress Software

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

The Bottom Line

For Progress Software, the current share price roughly lines up with what typical market multiples imply, so there is no clear signal of extreme undervaluation or overvaluation. Broader checks lean supportive, but the verdict still hinges on how well the company executes from here, especially with the planned Domo acquisition. The real dividing line between bulls and bears is whether Progress Software can turn that deal and its existing portfolio into durable, high quality earnings without eroding returns through integration or capital allocation missteps.

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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