Should Value Investors Buy Progress Software (PRGS) Stock?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Progress Software (PRGS) is a stock many investors are watching right now. PRGS is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.

Investors should also recognize that PRGS has a P/B ratio of 4. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 6.40. Over the past 12 months, PRGS's P/B has been as high as 7.05 and as low as 3.95, with a median of 5.89.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PRGS has a P/S ratio of 1.77. This compares to its industry's average P/S of 4.39.

Finally, investors will want to recognize that PRGS has a P/CF ratio of 9.86. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.31. Within the past 12 months, PRGS's P/CF has been as high as 18.02 and as low as 9.74, with a median of 14.83.

These are just a handful of the figures considered in Progress Software's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PRGS is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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