The main goal of long-term investing is to make money. Better yet, you’d like to see the stock price rise more than the market average. But Progress Software Corporation (NASDAQ:PRGS) missed that second target, with a share price increase of 65% over five years, which is below the market return. However, more recent buyers should be happy with the 26% increase over the past year.
So let’s take a look at the underlying fundamentals over the past five years and see whether they have kept pace with shareholder returns.
Check out our latest analysis for Progress Software
To quote Buffett, “Ships will sail around the world, but the Flat Earth Society will prosper. There will continue to be wide discrepancies between price and value in the marketplace…” One flawed but reasonable way to assess how sentiment around a company has changed is to compare its earnings per share (EPS) with the share price .
During five years of share price growth, Progress Software achieved compound earnings per share (EPS) growth of 17% per year. This earnings per share growth is higher than the average annual share price increase of 11%. So you could conclude that the broader market has become more cautious towards equities.
The company’s earnings per share (over time) are shown in the image below (click to see the exact numbers).
This free An interactive report on Progress Software’s earnings, revenue and cash flow is a great place to start if you want to research the stock further.
We’ve already covered Progress Software’s share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that takes into account the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Thanks to its dividend paying history, Progress Software’s TSR of 77% over the last five years is better than the share price return.
Progress Software achieved a TSR of 28% over the past twelve months. Unfortunately, this lags behind market returns. The silver lining is that the gains were actually better than the average annual return of 12% per year over five years. This could indicate that the company is gaining new investors as it continues its strategy. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. However, please note that Progress Software is listed 1 warning sign in our investment analysis you should know about…
For those who like to search winning investments this free list of undervalued companies with recent insider purchasing could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Do you have feedback on this article? Worried about the content? Please contact us directly from us. You can also email the editorial team (at) Simplywallst.com.
This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.
