Progress Software (PRGS) has drawn fresh attention after launching an AI powered update to its Telerik and Kendo UI platforms and appointing veteran technology leader Bridget Collins as Chief Information Officer earlier in August.
Progress Software’s recent AI product release and CIO appointment have arrived alongside a sharp 90 day share price return of 48.96% and a 30 day share price return of 17.20%. However, the 1 year total shareholder return has declined 5.01%, so recent momentum contrasts with weaker longer term results.
If the AI story at Progress Software has your attention, this can be a good moment to widen your search and review 76 profitable AI stocks that aren’t just burning cash
Progress Software’s share price has sprinted ahead of its 1 year record, yet it sits below both analyst targets and some intrinsic value estimates. Is that gap pointing to remaining upside, or to a market that has already caught up?
Most Popular Narrative: 20.5% Undervalued
Progress Software’s most followed narrative points to a fair value of $55.80 per share, compared with the recent $44.36 close. This sets up a clear valuation gap for investors to assess.
The analysts have a consensus price target of $55.8 for Progress Software based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $83.0, and the most bearish reporting a price target of just $45.0.
Want to understand why this narrative still points above today’s price even with flat revenue assumptions and lower margins ahead? The answer sits in how earnings, valuation multiples and a specific discount rate are stitched together into that $55.80 figure.
Result: Fair Value of $55.80 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, progress on the Progress Software story could be knocked off course if integration of deals like ShareFile or the planned Domo assets drags on margins or stretches the balance sheet.
Find out about the key risks to this Progress Software narrative.
Another View on Progress Software’s Valuation
A second lens on Progress Software comes from the current P/E ratio of 20.4x. That is well below the US Software industry average of 30.9x and the peer average of 35.3x. However, it is exactly in line with the fair ratio of 20.4x that the market could move towards. Is this a margin of safety or a signal that upside is already priced in?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Mixed signals around Progress Software are clear, so use that to your advantage and move fast to form your own view by checking the 2 key rewards and 2 important warning signs.
Looking for more investment ideas beyond Progress Software?
If Progress Software has sharpened your thinking, do not stop here. Use the Simply Wall St Screener to surface fresh ideas that fit your goals.
- Target potential mispricings by reviewing companies that appear attractively valued on both quality and price using the 48 high quality undervalued stocks.
- Secure income focused ideas by scanning for companies with robust payouts through the 12 dividend fortresses.
- Protect your downside by shortlisting companies with resilient profiles via the 75 resilient stocks with low risk scores.
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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MI
mitchell_lawler
The Foxhole
Gold miners still look inexpensive because the market thinks we’re near the top of the cycle. Given what’s happening to the dollar, I’m not so sure.
Is it a safer bet on gold to have just exposure to ETFs?
Between 2003 and 2011, gold nearly went 5x. Dollar went weak too. The gold companies did bad. It is worth noting that between 2003 and 2011, there was 2008! I will leave it your inference and research.
About NasdaqGS:PRGS
Progress Software
Provides software products that develops, deploys, and manages artificial intelligence (AI) powered applications and digital experiences in the United States and internationally.
Good value with proven track record.
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