NasdaqGS:PRGS

Stock Analysis Report

Executive Summary

Progress Software Corporation develops business applications.

Rewards

Trading at 13.9% below its fair value

Earnings are forecast to grow 44.93% per year

Risk Analysis

Has a high level of debt

Dividend of 1.47% is not well covered by earnings

Large one-off items impacting financial results

Profit margins (6.4%) are lower than last year (13.1%)



Snowflake Analysis

Reasonable growth potential with mediocre balance sheet.


Similar Companies

Share Price & News

How has Progress Software's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PRGS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.3%

PRGS

2.1%

US Software

1.8%

US Market


1 Year Return

20.7%

PRGS

42.2%

US Software

20.1%

US Market

Return vs Industry: PRGS underperformed the US Software industry which returned 42.1% over the past year.

Return vs Market: PRGS matched the US Market which returned 20.1% over the past year.


Shareholder returns

PRGSIndustryMarket
7 Day0.3%2.1%1.8%
30 Day-8.2%7.7%1.4%
90 Day8.4%18.8%8.8%
1 Year22.6%20.7%43.8%42.2%22.7%20.1%
3 Year61.3%54.0%152.6%142.2%50.1%40.4%
5 Year73.5%65.0%223.7%200.5%72.9%53.9%

Price Volatility Vs. Market

How volatile is Progress Software's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Progress Software undervalued compared to its fair value and its price relative to the market?

13.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PRGS ($45.04) is trading below our estimate of fair value ($52.28)

Significantly Below Fair Value: PRGS is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: PRGS is poor value based on its PE Ratio (76.4x) compared to the Software industry average (52.1x).

PE vs Market: PRGS is poor value based on its PE Ratio (76.4x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: PRGS is poor value based on its PEG Ratio (1.7x)


Price to Book Ratio

PB vs Industry: PRGS is overvalued based on its PB Ratio (6.1x) compared to the US Software industry average (5.9x).


Next Steps

Future Growth

How is Progress Software forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

44.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PRGS's forecast earnings growth (44.9% per year) is above the savings rate (1.7%).

Earnings vs Market: PRGS's earnings (44.9% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: PRGS's revenue (2.6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: PRGS's revenue (2.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PRGS's Return on Equity is forecast to be high in 3 years time (24.4%)


Next Steps

Past Performance

How has Progress Software performed over the past 5 years?

21.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PRGS has a large one-off loss of $32.0M impacting its November 30 2019 financial results.

Growing Profit Margin: PRGS's current net profit margins (6.4%) are lower than last year (13.1%).


Past Earnings Growth Analysis

Earnings Trend: PRGS's earnings have grown significantly by 21.5% per year over the past 5 years.

Accelerating Growth: PRGS's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PRGS had negative earnings growth (-46.8%) over the past year, making it difficult to compare to the Software industry average (17.1%).


Return on Equity

High ROE: PRGS's Return on Equity (8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Progress Software's financial position?


Financial Position Analysis

Short Term Liabilities: PRGS's short term assets ($284.7M) exceed its short term liabilities ($240.9M).

Long Term Liabilities: PRGS's short term assets ($284.7M) do not cover its long term liabilities ($310.1M).


Debt to Equity History and Analysis

Debt Level: PRGS's debt to equity ratio (89.9%) is considered high.

Reducing Debt: PRGS's debt to equity ratio has increased from 0.3% to 89.9% over the past 5 years.

Debt Coverage: PRGS's debt is well covered by operating cash flow (43.3%).

Interest Coverage: PRGS's interest payments on its debt are well covered by EBIT (8.1x coverage).


Balance Sheet

Inventory Level: PRGS has a low level of unsold assets or inventory.

Debt Coverage by Assets: PRGS's debt is not covered by short term assets (assets are 1x debt).


Next Steps

Dividend

What is Progress Software's current dividend yield, its reliability and sustainability?

1.47%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Progress Software before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.5%marketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: PRGS's dividend (1.47%) is higher than the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: PRGS's dividend (1.47%) is low compared to the top 25% of dividend payers in the US market (3.68%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, PRGS has been paying a dividend for less than 10 years.

Growing Dividend: PRGS's dividend payments have increased, but the company has only paid a dividend for 3 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (106.9%), PRGS's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.5yrs

Average management tenure


CEO

Yogesh Gupta (58yo)

3.3yrs

Tenure

US$4,810,311

Compensation

Mr. Yogesh Gupta has been the Chief Executive Officer of Progress Software Corporation since October 10, 2016 and as its President since October 2016. Prior to that time, Mr. Gupta served as an advisor to  ...


CEO Compensation Analysis

Compensation vs Market: Yogesh's total compensation ($USD4.81M) is about average for companies of similar size in the US market ($USD3.74M).

Compensation vs Earnings: Yogesh's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Yogesh Gupta
CEO, President & Director3.3yrsUS$4.81m0.19% $3.9m
Paul Jalbert
Executive Officer0.08yrsUS$1.93m0.047% $954.7k
John Ainsworth
Senior Vice President of Core Products3.1yrsUS$1.38m0.037% $745.9k
Loren Jarrett
Senior VP & GM of Developer Tools Business0.7yrsUS$1.38m0.037% $745.9k
Gary Quinn
Senior Vice President of Core Field Organization2.5yrsUS$1.45m0.024% $484.7k
Anthony Folger
Chief Financial Officer0.08yrsno datano data
Anthony Murphy
Chief Information Officer & Chief Information Security Officer2.7yrsno data0.0063% $128.8k
Brian Flanagan
Directory of Treasury & Investor Relations0yrsno datano data
Stephen Faberman
Chief Legal Officer & Secretary4.2yrsUS$1.31m0.18% $3.7m
Jennifer Ortiz
Vice President of Corporate Marketing0.3yrsno datano data

2.5yrs

Average Tenure

49yo

Average Age

Experienced Management: PRGS's management team is considered experienced (2.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Yogesh Gupta
CEO, President & Director3.3yrsUS$4.81m0.19% $3.9m
Michael Mark
Non-Voting Director Emeritus and Advisor to President & CEO1.8yrsUS$280.01kno data
John Egan
Independent Non-Executive Chairman of the Board7.2yrsUS$307.84k0.095% $1.9m
Paul Dacier
Independent Director2.7yrsUS$397.86kno data
David Krall
Independent Director12yrsUS$272.84k0.17% $3.4m
Charles Kane
Independent Director13.3yrsUS$272.84k0.17% $3.5m
Vivian Vitale
Director0.3yrsno datano data
Angela Tucci
Independent Director2yrsUS$552.22kno data
Rainer Gawlick
Independent Director2.7yrsUS$420.36kno data
Samskriti King
Independent Director2yrsUS$557.22kno data

2.7yrs

Average Tenure

60yo

Average Age

Experienced Board: PRGS's board of directors are not considered experienced ( 2.7 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: PRGS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Progress Software Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Progress Software Corporation
  • Ticker: PRGS
  • Exchange: NasdaqGS
  • Founded: 1981
  • Industry: Systems Software
  • Sector: Software
  • Market Cap: US$2.031b
  • Shares outstanding: 45.10m
  • Website: https://www.progress.com

Number of Employees


Location

  • Progress Software Corporation
  • 14 Oak Park Drive
  • Bedford
  • Massachusetts
  • 1730
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PRGSNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDJul 1991
PGRDB (Deutsche Boerse AG)YesCommon StockDEEURJul 1991

Biography

Progress Software Corporation develops business applications. The company operates through three segments: OpenEdge, Data Connectivity and Integration, and Application Development and Deployment. The OpenEdge segment offers Progress OpenEdge, a development software, which builds multi-language applications for secure deployment across various platforms and devices, as well as cloud; Progress Corticon, a business rules management system that enables applications with decision automation and change process, and decision-related insight capabilities; Progress Kinvey, a platform for building enterprise applications; MOVEit that provides secure collaboration and automated file transfers of critical business information; WhatsUp Gold, a network monitoring solution; and DataRPM, a cognitive predictive maintenance solution for industrial IoT. The Data Connectivity and Integration segment provides Progress DataDirect Connect software, which offers data connectivity using industry-standard interfaces to connect applications running on various platforms; and Progress DataDirect Hybrid Data Pipeline, a data access service that provides cloud and on-premises data sources for hybrid cloud applications, such as CRM, data management platforms, and hosted analytics. The Application Development and Deployment segment offers Developer Tools, a set of components for user interface development; and Sitefinity, a Web content management and customer analytics platform. The company also provides project management, implementation, custom development, programming, and other services, as well as services to Web-enable applications; and training services. It sells its products to end users, application partners, original equipment manufacturers, and system integrators. The company has operations in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. Progress Software Corporation was founded in 1981 and is headquartered in Bedford, Massachusetts. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 01:02
End of Day Share Price2020/02/14 00:00
Earnings2019/11/30
Annual Earnings2019/11/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.