Comparing Progress Software (PRGS) and Red Hat (RHT)

Progress Software (NASDAQ: PRGS) and Red Hat (NYSE:RHT) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Dividends

Progress Software pays an annual dividend of $0.56 per share and has a dividend yield of 1.4%. Red Hat does not pay a dividend. Progress Software pays out -51.4% of its earnings in the form of a dividend.

Risk & Volatility

Progress Software has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, Red Hat has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500.

Profitability

This table compares Progress Software and Red Hat’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Progress Software -13.23% 20.30% 10.82%
Red Hat 11.49% 25.27% 7.43%

Earnings and Valuation

This table compares Progress Software and Red Hat’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Progress Software $405.34 million 4.82 -$55.72 million ($1.09) -37.47
Red Hat $2.41 billion 9.32 $253.70 million $1.66 75.98

Red Hat has higher revenue and earnings than Progress Software. Progress Software is trading at a lower price-to-earnings ratio than Red Hat, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and target prices for Progress Software and Red Hat, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Progress Software 0 3 1 0 2.25
Red Hat 1 8 22 0 2.68

Progress Software currently has a consensus price target of $36.00, suggesting a potential downside of 11.85%. Red Hat has a consensus price target of $117.10, suggesting a potential downside of 7.16%. Given Red Hat’s stronger consensus rating and higher probable upside, analysts plainly believe Red Hat is more favorable than Progress Software.

Insider & Institutional Ownership

93.7% of Progress Software shares are owned by institutional investors. Comparatively, 93.9% of Red Hat shares are owned by institutional investors. 2.5% of Progress Software shares are owned by insiders. Comparatively, 0.7% of Red Hat shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Red Hat beats Progress Software on 12 of the 16 factors compared between the two stocks.

About Progress Software

Progress Software Corporation is engaged in application development. The Company operates through three segments: OpenEdge, Data Connectivity and Integration (DCI), and Application Development and Deployment (AppDev). The OpenEdge business segment provides the product enhancements and marketing support to its partner base. It is also focused on providing partners and direct end users with a path to develop and integrate cloud-based applications. Its solutions include Progress OpenEdge and Progress Corticon. The DCI segment is focused on its data assets, including the data integration components of its cloud offerings. Its solutions include Progress DataDirect Connect and Progress DataDirect Cloud. The AppDev business segment is focused on generating customers for its application development assets. Its solutions include Dev Tools, NativeScript, Dev Cloud, Telerik Platform, Test Studio, Sitefinity and Progress Rollbase. Its offerings span Web, mobile and data.

About Red Hat

Red Hat, Inc. (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific. Its products and services include infrastructure-related offerings, application development-related and other technology offerings, and consulting, support and training services. Its infrastructure-related offerings include Red Hat Enterprise Linux, Red Hat Satellite and Red Hat Enterprise Virtualization. Its application development-related and other technology offerings include Red Hat JBoss Middleware, Red Hat cloud offerings, Red Hat Mobile and Red Hat Storage. Its consulting services include upgrade planning, platform migrations, solution integration and application development.

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