Wayman Value Investing - New Stock Recommendation - December 2023
A new position is being added to the Wayman portfolio
# # # New Position # # #
Progress Software Corporation (PRGS)
Recent Price: 53.69
Market Cap: 2.34B
P/FCF: 13.75
P/E: 30.42
P/S: 3.47
LT Debt/Eq: 1.70
Projected 4yr FCF: 1.1B
Wayman Portfolio Tier: Gather
Progress Software Corporation is a pioneering force in the realm of business application development. Their mission is to provide the best products to develop, deploy and manage high-impact business applications. They offer a comprehensive stack of products designed to make technology teams more productive. Progress Software Corporation ensures a holistic approach to addressing varied tech challenges. The company’s global reach spans the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 1981, with its headquarters located in Burlington, Massachusetts.
Progress Software emerges as an enticing investment prospect underpinned by a lucrative business model, strategic M&A maneuvers, a robust portfolio of infrastructure software, and attractive valuation metrics. The leadership, spearheaded by CEO Yogesh Gupta, demonstrates a keen strategic vision that emphasizes M&A, share buybacks, and dividends, driving notable growth and expanding margins over the years.
The company’s business model revolves around empowering customers with tools to manage crucial business applications. Boasting over 100,000 enterprise customers, Progress Software’s reach extends to 1,700 software companies and 6 million business users. Noteworthy is its focus on recurring revenue, derived from maintenance contracts and subscription-based models, providing a stable revenue stream and fostering earnings growth.
Integral to Progress Software’s success is its disciplined M&A strategy targeting smaller infrastructure software companies. The company has successfully completed four pivotal acquisitions since 2018. These transactions played a substantial role in boosting both revenue and earnings growth. Company financials present robust performance, marked by revenue growth, sturdy operating margins, and a consistent net retention rate, affirming the enduring strength of its product portfolio.
Progress Software presents a promising investment opportunity with a portfolio of robust software products, a strong customer base, and sound financial performance. The strategic emphasis on M&A, shareholder-friendly practices, and ongoing innovation positions the company favorably for sustained growth. Coupled with an appealing valuation relative to the industry, Progress Software emerges as a compelling choice for investors seeking a highly profitable player in the software market.
Please keep in mind that while some investors might rely on market catalysts when considering what new positions to take, Wayman considers its style to be “catalyst-free investing.” Our reason for purchasing will always be based on our calculations which show a business is worth far more than where the market is pricing it. - Frank Memcaj, Founder of Wayman Value Investing