Progress Software Corporation (NASDAQ:PRGS), may not be a large-cap stock, but it has seen significant price moves over the past few months on the NASDAQGS, hitting highs of $51.56 and falling to lows of $43.41. Certain movements in the stock price can give investors a better opportunity to get into the stock and potentially buy at a lower price. A question that needs to be answered is whether Progress Software’s current trading price of $43.41 reflects the true value of small caps? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at Progress Software’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
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What is Opportunity In Progress software?
Good news, investors! Progress Software is still a good deal right now according to my multiple pricing model, which compares the company’s price-to-earnings ratio to the industry average. I used the price/earnings ratio in this case because there is not enough visibility to predict its cash flow. The stock’s ratio of 19.76x is currently well below the industry average of 40.04x, meaning it is trading at a lower price than its peers. Progress Software’s stock price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you think the stock price should eventually reach its industry peers, a low beta might suggest it’s unlikely to do so anytime soon, and once it does, it may be difficult to fall back into an attractive buy range.
Can we expect growth from Progress Software?
Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Buying a big company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with relatively moderate earnings growth of 8.7% expected over the next two years, growth does not appear to be a key driver for a purchase decision for Progress Software, at least in the short term.
What this means for you
Are you a shareholder? Even though the growth is relatively muted, as PRGS is currently trading below the industry PE ratio, now may be the perfect time to increase your stock holdings. However, there are also other factors such as the capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on PRGS for a while, it might be time to get into the stock. Its future earnings outlook is not yet fully reflected in the current share price, which means it is not too late to buy PRGS. But before making investment decisions, consider other factors such as the strength of its balance sheet, in order to make an informed assessment.
With this in mind, we would not consider investing in a stock unless we have a thorough understanding of the risks. Every business has risks, and we’ve spotted 2 warning signs for Progress Software you should know.
If you are no longer interested in Progress Software, you can use our free platform to view our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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