Progress Software Corporation’s stock was trading at $40.99 on February 2nd, with a trailing P/E of 24.65 and forward P/E of 7.03. The company faces challenges with leverage, inconsistent performance, and an overreliance on acquisitions for growth. Recent trends suggest potential near-term downside due to deteriorating earnings quality.
PRGS acquired ShareFile from Citrix for $875 million in October 2024, pushing leverage above 3.5x. The company’s focus on AI has not translated to strong organic growth, with recent trends showing deceleration. Financial metrics like free cash flow and revenue recognition practices raise red flags, indicating potential disappointment in underlying performance post-acquisition.
While PRGS has reported growth incorporating acquired ARR, recent trends show deceleration and negative sequential quarters. Financial metrics like cash flow, debt levels, and revenue recognition practices pose risks to the company’s financial position. A potential strategic sale could be an upside, but near-term headwinds and operational challenges are likely.
Progress Software Corporation is not among the 30 Most Popular Stocks Among Hedge Funds. While 25 hedge fund portfolios held PRGS at the end of the third quarter, we believe other AI stocks offer greater upside potential and lower downside risk. For undervalued AI stocks with potential benefits from tariffs and onshoring trends, check out our free report.

Read more at Yahoo Finance: Progress Software Corporation (PRGS): A Bear Case Theory