Results: Progress Software Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

The quarterly results for Progress Software Corporation (NASDAQ:PRGS) were released last week, making it a good time to revisit its performance. It looks like a credible result overall - although revenues of US$185m were in line with what the analysts predicted, Progress Software surprised by delivering a statutory profit of US$0.51 per share, a notable 17% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Progress Software

Taking into account the latest results, Progress Software's eight analysts currently expect revenues in 2024 to be US$726.9m, approximately in line with the last 12 months. Statutory earnings per share are predicted to soar 27% to US$2.01. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$728.5m and earnings per share (EPS) of US$1.99 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$63.61, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Progress Software analyst has a price target of US$67.00 per share, while the most pessimistic values it at US$60.00. This is a very narrow spread of estimates, implying either that Progress Software is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Progress Software's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Progress Software's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.2% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that Progress Software is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Progress Software's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$63.61, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Progress Software going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Progress Software that you should be aware of.

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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.