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How Does Progress Software Compare to Its Peers?

Gabriel Kane

US Equity Market Update for October 1, 2015

(Continued from Prior Part)

Progress Software and its peers

An analysis of Progress Software’s income statement in 3Q15 follows:

  • The gross profit margins of Progress Software (PRGS), Adobe Systems (ADBE), Red Hat (RHT), CA (CA), and Citrix Systems (CTXS) are 84.01%, 84.32%, 84.93%, 85.98%, and 83.34%, respectively.

An analysis of Progress Software’s balance sheet in 3Q15 follows:

  • The current ratios of Progress Software, Adobe, Red Hat, CA, and Citrix are 1.67, 2.20, 1.35, 1.39, and 1.04, respectively.

An analysis of Progress Software’s valuation follows:

  • The PE (price-to-earnings) ratios of Progress Software, Adobe, Red Hat, CA, and Citrix are 43.44x, 85.46x, 70.38x, 15.13x, and 41.48x, respectively.
  • The PBV (price-to-book value) ratios of Progress Software, Adobe, Red Hat, CA, and Citrix are 2.47x, 6.10x, 9.80x, 2.08x, and 5.08x, respectively.

According to the above findings, the peers outperformed Progress Software based on the gross profit margin and PBV ratio. However, Progress Software is way ahead of its peers based on the current ratio.

ETFs that invest in Progress Software 

The PowerShares Dynamic Software Portfolio ETF (PSJ) invests 2.70% of its holdings in Progress Software. PSJ uses a quantitative model to choose US software companies across the market cap spectrum.

The PowerShares S&P SmallCap Information Technology ETF (PSCT) invests 1.16% of its holdings in Progress Software. PSCT tracks a market-cap-weighted index of small-cap US technology companies. Its selection universe is limited to the S&P SmallCap 600.

The PowerShares S&P SmallCap Low Volatility ETF (XSLV) invests 0.77% of its holdings in Progress Software. XSLV tracks a volatility weighted index of the 120 least volatile securities from the S&P SmallCap 600 Index.

Comparing Progress Software and its ETFs

An analysis of Progress Software’s price movement follows:

  • The YTD (year-to-date) price movements of Progress Software, PSJ, PSCT, and XSLV are -5.14%, -0.49%, -5.39%, and -3.45%, respectively.

An analysis of Progress Software’s valuation follows:

  • The PE ratios of Progress Software, PSJ, PSCT, and XSLV are 43.44x, 48.16x, 46.46x, and 22.74x, respectively.
  • The PBV ratios of Progress Software, PSJ, PSCT, and XSLV are 2.47x, 6.49x, 2.39x, and 1.73x, respectively.

According to the above findings, the ETFs are way ahead of Progress Software based on the price movement and PE ratio.

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