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Progress Software (PRGS) is turning heads after recent stock performance data revealed mixed returns, including a 10.8% one-day rise and a year-long decline in total returns of 25.3%.
Check out our latest analysis for Progress Software.
The one-day share price return of 10.75% to US$42.75 comes after a softer period, with the 90-day share price return of 5.15% and the one-year total shareholder return of 25.34%. This suggests that recent momentum contrasts with weaker longer-term results.
If this kind of sharp one-day move has your attention, now could be a good time to compare with other software and AI names using our high-growth technology and AI stocks.
With Progress Software trading at US$42.75 and its stated intrinsic value and analyst target both over 50% higher, the key question is whether the market is overlooking value or already pricing in potential future growth.
With a price-to-earnings ratio of 25.1x at $42.75, Progress Software is below both its peer and broader software averages, indicating a relatively lower earnings multiple.
The price-to-earnings ratio compares the current stock price to earnings per share, giving you a quick idea of how much investors are paying for each dollar of earnings. For a software and AI tools provider like Progress Software, this often reflects expectations for future profit growth and the sustainability of its cash flows.
Here the picture is mixed. The stock is described as good value relative to the US software industry’s average price-to-earnings ratio of 30.9x and a peer average of 38.4x, but still somewhat expensive relative to an estimated reasonable price-to-earnings ratio of 24.5x, which our model suggests the market may ultimately trend toward.
Against that backdrop, the current multiple looks like a discount to many direct peers, but a small premium over the fair ratio level that our model highlights as a potential anchor. Discover the fair SWS ratio for Progress Software
Result: price-to-earnings ratio of 25.1x (ABOUT RIGHT)
However, longer-term total returns, including declines of 25.3% over one year and 16.7% over three years, along with modest 1.3% annualized revenue growth, could keep sentiment cautious.
Discover the main risks of this Progress Software story.
While the price-to-earnings ratio of 25.1x suggests that Progress Software is only slightly above the reasonable ratio of 24.5x, our DCF model paints a stronger picture. From that perspective, the stock’s US$42.75 valuation is about 51% below an intrinsic value estimate of US$87.84. Which lens do you think suits this company better?
