Please ensure Javascript is enabled for purposes of website accessibility

Why Pegasystems Stock Has Gained 27% So Far in 2020

By Demitri Kalogeropoulos - Jul 8, 2020 at 8:56AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The shift toward digital enterprise management could spell sustained earnings growth ahead.

What happened

Pegasystems (PEGA 6.32%) shareholders are beating a down market this year. Their stock rose 27% compared to a 4% decline in the S&P 500 through the end of June, according to data provided by S&P Global Market Intelligence.

The enterprise software specialist's shares had been down by 20% during the market swoon in March, but have climbed back to new highs with the latest rally.

A man sitting behind a computer screen.

Image source: Getty Images.

So what

Investors found plenty of news to celebrate in Pega's fiscal first-quarter report, which ran through late March and covered the early days of the COVID-19 pandemic in key markets like Europe and North America. That announcement showed a 21% increase in contract value, which management says is the best indicator of long-term sales growth. Revenue rose 25% and net loss improved to $25 million from $29 million a year ago.

Now what

With nearly all of its 2020 revenue already booked, CEO Alan Trefler and his team are feeling confident that they'll hit their growth goal despite economic disruptions brought on by the pandemic. Investors are even more excited about the prospect of COVID-19 accelerating the enterprise shift toward digital management platforms. That move has helped boost Pega's client base over the last few years, which should support a return to sustainably positive earnings over time.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Pegasystems. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pegasystems, Inc. Stock Quote
Pegasystems, Inc.
$41.41 (6.32%) $2.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.