Value
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.9 |
| P/S | 9.3 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.8 |
| PEG | 5.8 |
| Analyst target | 6.0 |
- ▸Forward P/E: 6.2x
- ▸PEG: 1.31
- ▸Attractively valued
PRGS · Why this verdict
Why Progress Software (PRGS) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Progress Software has an earnings report in 13 days with a perfect four-quarter beat streak at an average positive surprise of 14.84%, and the edge type is identified as a near-term earnings catalyst, making this a situation where momentum from a strong result could be a significant near-term driver. Catalyst breakdown | The company beats consensus EPS for the 5th consecutive quarter and the stock rises above $38 within 30 days of the earnings announcement. | →Stable |
| CounterEarnings proximity with a 4-of-4 beat streak can create elevated expectations that make it harder to exceed consensus; even a modest in-line result could be interpreted as a disappointment relative to high hopes. | ||
Free cash flow equals 291% of net income and the Piotroski F-Score is 7/9, indicating that cash earnings significantly exceed reported GAAP earnings, likely due to accelerated depreciation or deferred tax items in the software subscription model, which makes the forward price-to-earnings of 5.1 times even more attractive on a cash basis. Quality breakdown | Free cash flow remains above 200% of net income in each of the next 2 annual reporting periods. | →Stable |
| CounterInfrastructure software companies with high FCF-to-earnings ratios often have elevated deferred revenue that will need to be earned through service delivery; the metric can overstate true economic profitability. | ||
A death cross is confirmed with the 200-day moving average declining at negative 6.1% per 30 days, and the company carries debt-to-equity of 2.8 times, meaning a downside scenario combines both technical selling pressure and the risk that rising rates or covenant concerns reduce financial flexibility. Bear case | Debt-to-equity falls below 2.0 within the next 2 annual reporting periods as free cash flow is deployed toward debt reduction. | →Stable |
| CounterSoftware companies regularly carry high debt from acquisition financing that they pay down rapidly using strong recurring revenue cash flows; the leverage level may be appropriate given the FCF profile. | ||
The stock trades at a forward price-to-earnings of 5.1 times, a PEG of 1.03, and is priced more than 40% below the analyst consensus target of $44.22 from the current $31.01, placing it among the deepest values in the software infrastructure sector relative to analyst estimates. Valuation breakdown | The stock rises above $40 within 12 months as the value gap narrows following positive earnings. | →Stable |
| CounterDeeply discounted software infrastructure companies can remain cheap for extended periods if revenue growth is unimpressive; at 3.5% revenue growth, the rerating catalyst may be slow to materialize. | ||
Progress Software has an earnings report in 13 days with a perfect four-quarter beat streak at an average positive surprise of 14.84%, and the edge type is identified as a near-term earnings catalyst, making this a situation where momentum from a strong result could be a significant near-term driver.
→StableCatalyst breakdown
- Expectation
- The company beats consensus EPS for the 5th consecutive quarter and the stock rises above $38 within 30 days of the earnings announcement.
CounterEarnings proximity with a 4-of-4 beat streak can create elevated expectations that make it harder to exceed consensus; even a modest in-line result could be interpreted as a disappointment relative to high hopes.
Free cash flow equals 291% of net income and the Piotroski F-Score is 7/9, indicating that cash earnings significantly exceed reported GAAP earnings, likely due to accelerated depreciation or deferred tax items in the software subscription model, which makes the forward price-to-earnings of 5.1 times even more attractive on a cash basis.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 200% of net income in each of the next 2 annual reporting periods.
CounterInfrastructure software companies with high FCF-to-earnings ratios often have elevated deferred revenue that will need to be earned through service delivery; the metric can overstate true economic profitability.
A death cross is confirmed with the 200-day moving average declining at negative 6.1% per 30 days, and the company carries debt-to-equity of 2.8 times, meaning a downside scenario combines both technical selling pressure and the risk that rising rates or covenant concerns reduce financial flexibility.
→StableBear case
- Expectation
- Debt-to-equity falls below 2.0 within the next 2 annual reporting periods as free cash flow is deployed toward debt reduction.
CounterSoftware companies regularly carry high debt from acquisition financing that they pay down rapidly using strong recurring revenue cash flows; the leverage level may be appropriate given the FCF profile.
The stock trades at a forward price-to-earnings of 5.1 times, a PEG of 1.03, and is priced more than 40% below the analyst consensus target of $44.22 from the current $31.01, placing it among the deepest values in the software infrastructure sector relative to analyst estimates.
→StableValuation breakdown
- Expectation
- The stock rises above $40 within 12 months as the value gap narrows following positive earnings.
CounterDeeply discounted software infrastructure companies can remain cheap for extended periods if revenue growth is unimpressive; at 3.5% revenue growth, the rerating catalyst may be slow to materialize.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Progress Software is an attractively valued infrastructure software company with a perfect four-quarter earnings beat streak, exceptional free cash flow conversion at 291% of net income, and an earnings catalyst in 13 days, but a confirmed death cross with the 200-day moving average declining at negative 6.1% per 30 days and high leverage at 2.8 times debt-to-equity create real downside risk if the upcoming earnings disappoint.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.2 |
| ROA | 3.3 |
| Gross margin | 10.0 |
| Op margin | 7.4 |
| Net margin | 4.4 |
| Current ratio | 3.2 |
| FCF quality | 10.0 |
| Moat | 6.2 |
| Rule of 40 | 5.5 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 346% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.2 |
| EPS growth | 7.6 |
Momentum
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 1.1 |
- ▸Overbought (RSI 70)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.3 |
| Analyst rating | 7.6 |
| Price target | 8.6 |
- ▸LLM news sentiment: +0.46 (n=10)
- ▸Light analyst coverage (6.0) — signal dampened
- ▸Analyst upside: 31%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $130,334 (0.008% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.1 |
| quality rank | 6.0 |
| growth rank | 2.4 |
Technical
1.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.3 |
| 52w position | 1.8 |
Risk (lower is worse)
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.2 |
| days to cover | 4.1 |
| volatility | 0.0 |
| put call | 8.1 |
| implied vol | 4.0 |
| beta | 8.1 |
| debt equity | 2.4 |
Catalyst
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.7 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (7)
- MOMENTUM:6.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:EARNINGS:0.70
- EARNINGS_PROXIMITY:85d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.9<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=6.7>=5.0 recovering
Reward-to-Risk
0.92
Upside
+13.8%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 70
EdgeInst Constrain — Small cap ($1.6B) below institutional reach
SuitabilitySpeculative — Drawdown -41% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 4.4 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.9<1.5@spot) reinforce the read. Current asymmetry R:R is 0.92 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.8, Value at 7.4, and Catalyst at 7.1; the weakest are Technical at 1.0, Peer rank at 3.9, and Risk (lower is worse) at 4.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.92 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Catalyst Upcoming Beat Streak
Trip ifEPS surprise falls below 0% in the upcoming earnings report or in at least 2 of the next 4 reported quarters.
- P2Exceptional Cash Conversion Quality
Trip ifFree cash flow falls below 100% of net income in any reported annual period over the next 12 months.
- P3Death Cross And High Leverage
Trip ifDebt-to-equity ratio rises above 3.5 times in any reported period over the next 12 months.
- P4Deep Value Analyst Upside
Trip ifThe stock price remains below $28 for more than 30 consecutive calendar days, indicating the value thesis is not attracting buyers.