Pegasystems (PEGA) vs. The Competition Financial Analysis

Pegasystems (NASDAQ:PEGA) is one of 953 publicly-traded companies in the “Software” industry, but how does it weigh in compared to its competitors? We will compare Pegasystems to similar companies based on the strength of its valuation, earnings, risk, profitability, dividends, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Pegasystems and its competitors top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Pegasystems	$1.75 billion	$393.44 million	21.48
Pegasystems Competitors	$1.90 billion	$385.94 million	110.48

Pegasystems’ competitors have higher revenue, but lower earnings than Pegasystems. Pegasystems is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Volatility and Risk

Pegasystems has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500. Comparatively, Pegasystems’ competitors have a beta of 1.27, suggesting that their average stock price is 27% more volatile than the S&P 500.

Profitability

This table compares Pegasystems and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pegasystems	16.86%	35.22%	15.55%
Pegasystems Competitors	-620.53%	20.98%	-8.95%

Dividends

Pegasystems pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Pegasystems pays out 7.5% of its earnings in the form of a dividend. As a group, “Software” companies pay a dividend yield of 1.9% and pay out 48.4% of their earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Pegasystems and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pegasystems	2	7	6	0	2.27
Pegasystems Competitors	5717	21424	44694	1492	2.57

Pegasystems presently has a consensus target price of $45.73, suggesting a potential upside of 32.24%. As a group, “Software” companies have a potential upside of 28.15%. Given Pegasystems’ higher probable upside, equities research analysts plainly believe Pegasystems is more favorable than its competitors.

Insider & Institutional Ownership

46.9% of Pegasystems shares are held by institutional investors. Comparatively, 42.0% of shares of all “Software” companies are held by institutional investors. 48.4% of Pegasystems shares are held by insiders. Comparatively, 19.8% of shares of all “Software” companies are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Pegasystems beats its competitors on 8 of the 15 factors compared.

About Pegasystems

Pegasystems Inc. develops, markets, licenses, hosts, and supports enterprise software in the United States, rest of the Americas, the United Kingdom, rest of Europe, the Middle East, Africa, and the Asia-Pacific. The company provides Pega Infinity, a software portfolio comprising of Pega Customer Decision Hub, a real-time AI-powered decision engine to enhance customer acquisition and experiences across inbound, outbound, and paid media channels; Pega Customer Service to anticipate customer needs, connect customers to people and systems, and automate customer interactions to evolve the customer service experience, as well as to allow enterprises to deliver interactions across channels and enhance employee productivity; and Pega Platform, an intelligent automation software for increasing efficiency of clients’ processes and workflows. It also offers Situational Layer Cake that organizes logic into layers that map to the unique dimensions of a client’s business, such as customer types, lines of business, geographies, etc.; Pega Express Methodology and low code that connects enterprise data and systems to customer experience channels; Pega Cloud that allows clients to develop, test, and deploy applications; Pega Catalyst, which helps clients to transform and prototype their customer journeys; Pega Academy, which offers instructor-led and online training to its employees, clients, and partners; and global service assurance and client support services. It primarily markets its software and services to financial services, healthcare, communications and media, government, insurance, manufacturing and high tech, and consumer services markets through a direct sales force, as well as partnerships with technology providers and application developers. Pegasystems Inc. was incorporated in 1983 and is headquartered in Cambridge, Massachusetts.