Progress Software Stock To $18?
Progress Software (PRGS) stock has fallen 9.3% during the past day, and is currently trading at $25.65. Our multi-factor assessment suggests that it may be time to sell PRGS stock. We have, overall, a pessimistic view of the stock, and a price of $18 may not be out of reach. We believe there are only a couple of things to fear in PRGS stock given its overall strong operating performance and financial condition. Hence, despite its low valuation, this makes the stock look risky.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Low |
| What you get: | |
| Growth | Very Strong |
| Profitability | Moderate |
| Financial Stability | Weak |
| Downturn Resilience | Moderate |
| Operating Performance | Strong |
| Stock Opinion | Risky |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $1.1 Bil in market cap, Progress Software provides development software and data connectivity solutions for building and securely deploying multi-language business applications across platforms and cloud environments.
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[1] Valuation Looks Low
| PRGS | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 1.1 | 3.2 |
| Price-to-Earnings Ratio | 15.1 | 23.4 |
| Price-to-Free Cash Flow Ratio | 4.8 | 19.3 |
This table highlights how PRGS is valued vs broader market. For more details see: PRGS Valuation Ratios
[2] Growth Is Very Strong
- Progress Software has seen its top line grow at an average rate of 17.9% over the last 3 years
- Its revenues have grown 30% from $753 Mil to $978 Mil in the last 12 months
- Also, its quarterly revenues grew 17.5% to $253 Mil in the most recent quarter from $215 Mil a year ago.
| PRGS | S&P 500 | |
|---|---|---|
| 3-Year Average | 17.9% | 5.7% |
| Latest Twelve Months* | 29.8% | 6.7% |
| Most Recent Quarter (YoY)* | 17.5% | 7.3% |
This table highlights how PRGS is growing vs broader market. For more details see: PRGS Revenue Comparison
[3] Profitability Appears Moderate
- PRGS last 12 month operating income was $174 Mil representing operating margin of 17.8%
- With cash flow margin of 24.1%, it generated nearly $235 Mil in operating cash flow over this period
- For the same period, PRGS generated nearly $73 Mil in net income, suggesting net margin of about 7.5%
| PRGS | S&P 500 | |
|---|---|---|
| Current Operating Margin | 17.8% | 18.6% |
| Current OCF Margin | 24.1% | 20.7% |
| Current Net Income Margin | 7.5% | 12.8% |
This table highlights how PRGS profitability vs broader market. For more details see: PRGS Operating Income Comparison
[4] Financial Stability Looks Weak
- PRGS Debt was $1.4 Bil at the end of the most recent quarter, while its current Market Cap is $1.1 Bil. This implies Debt-to-Equity Ratio of 129.8%
- PRGS Cash (including cash equivalents) makes up $95 Mil of $2.5 Bil in total Assets. This yields a Cash-to-Assets Ratio of 3.9%
| PRGS | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 129.8% | 22.0% |
| Current Cash-to-Assets Ratio | 3.9% | 7.3% |
[5] Downturn Resilience Is Moderate
PRGS saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- PRGS stock fell 22.3% from a high of $53.18 on 16 November 2021 to $41.32 on 26 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 30 November 2022
- Since then, the stock increased to a high of $69.89 on 25 November 2024 , and currently trades at $25.65
| PRGS | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -22.3% | -25.4% |
| Time to Full Recovery | 65 days | 464 days |
2020 Covid Pandemic
- PRGS stock fell 39.4% from a high of $49.06 on 17 January 2020 to $29.75 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 24 September 2021
| PRGS | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -39.4% | -33.9% |
| Time to Full Recovery | 555 days | 148 days |
2008 Global Financial Crisis
- PRGS stock fell 56.5% from a high of $22.60 on 26 December 2007 to $9.83 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 13 May 2010
| PRGS | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -56.5% | -56.8% |
| Time to Full Recovery | 430 days | 1,480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read PRGS Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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