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Pegasystems Inc. (NASDAQ:PEGA), might not be a large cap stock, but it saw a significant share price rise of 55% in the past couple of months on the NASDAQGS. The company is now trading at yearly-high levels following the recent surge in its share price. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Pegasystems’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Pegasystems
What Is Pegasystems Worth?
Great news for investors – Pegasystems is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is $137.68, but it is currently trading at US$108 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Pegasystems’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Pegasystems generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Pegasystems' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since PEGA is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on PEGA for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PEGA. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.