Progress Software (PRGS) Valuation Check After Q4 Earnings Beat And AI Growth Plans

Q4 earnings beat and AI focus put Progress Software (PRGS) in the spotlight

Progress Software (PRGS) has moved back into focus after a strong Q4 earnings beat, with management highlighting AI driven growth plans, tighter cost controls, and revenue opportunities across its AI powered software platforms.

See our latest analysis for Progress Software.

At a share price of US$40.84, Progress Software has seen strong short term momentum, with a 7 day share price return of 11.8%, even though its 1 year total shareholder return of 26.9% and 3 year total shareholder return of 27.5% point to a weaker longer run experience for holders.

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With Progress Software trading at US$40.84, and with an implied discount to both analyst targets and some intrinsic estimates, the key question now is simple: are investors looking at a genuine opportunity, or is future AI growth already fully priced in?

Most Popular Narrative: 41.7% Undervalued

Compared to the last close at $40.84, the most followed narrative points to a fair value of $70, built around recurring SaaS revenue and AI focused efficiency gains.

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.

Read the complete narrative.

Want to see what is driving that gap between the current price and the narrative fair value? The story focuses on higher margins, steadier recurring revenue, and a future earnings profile that assumes meaningful scale benefits from acquisitions and AI initiatives. The detailed playbook sits inside the full narrative.

Result: Fair Value of $70 (UNDERVALUED)

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

However, this hinges on smooth ShareFile integration and disciplined SaaS acquisitions, with cost overruns or lower margin deals both potential spoilers for the bullish case.

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

Another View: P/E sends a more cautious signal

Our DCF model sees Progress Software as trading at a 56% discount to an estimated fair value of $92.71, which lines up with the earlier undervalued narrative. Yet the current P/E of 23.5x sits almost exactly on its fair ratio of 23.4x, and below both peers at 30.9x and the US Software industry at 25.4x. Is this a genuine margin of safety, or just compensation for slower forecast growth and funding risks?

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

Next Steps

The mix of AI optimism and valuation questions is clear here, so if you want to move quickly and build your own view, weigh the story against 2 key rewards and 2 important warning signs.

Looking for more investment ideas?

If this update has sharpened your focus on valuation and AI themes, do not stop here; broaden your watchlist now so potential opportunities do not slip past you.

• Spot potential mispricings early by scanning our list of 56 high quality undervalued stocks that pair solid fundamentals with what may be attractive entry points.
• Strengthen your income stream by reviewing 15 dividend fortresses, where yields of 5% or more come with an emphasis on stability.
• Prioritise resilience by filtering for 80 resilient stocks with low risk scores, focusing on companies with lower risk scores that may better suit a cautious approach.

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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