Critical Contrast: Blackbaud (BLKB) vs. Progress Software (PRGS)

Blackbaud (NASDAQ: BLKB) and Progress Software (NASDAQ:PRGS) are both mid-cap technology companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Analyst Recommendations

This is a summary of recent ratings and price targets for Blackbaud and Progress Software, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Blackbaud 0 4 4 0 2.50
Progress Software 0 1 1 0 2.50

Blackbaud currently has a consensus target price of $96.71, suggesting a potential downside of 6.33%. Progress Software has a consensus target price of $39.50, suggesting a potential downside of 18.89%. Given Blackbaud’s higher probable upside, equities analysts clearly believe Blackbaud is more favorable than Progress Software.

Insider & Institutional Ownership

97.2% of Progress Software shares are held by institutional investors. 2.2% of Blackbaud shares are held by insiders. Comparatively, 2.5% of Progress Software shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Blackbaud and Progress Software’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Blackbaud $788.31 million 6.30 $65.93 million $0.96 107.55
Progress Software $397.57 million 5.68 $37.41 million $0.77 63.25

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

Risk and Volatility

Blackbaud has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Progress Software has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Dividends

Blackbaud pays an annual dividend of $0.48 per share and has a dividend yield of 0.5%. Progress Software pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Blackbaud pays out 50.0% of its earnings in the form of a dividend. Progress Software pays out 72.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

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

Net Margins Return on Equity Return on Assets
Blackbaud 8.36% 29.21% 5.97%
Progress Software 9.41% 21.25% 11.25%

Summary

Blackbaud beats Progress Software on 10 of the 15 factors compared between the two stocks.

About Blackbaud

Blackbaud, Inc. is a cloud software company. The Company offers a range of cloud and on-premise solutions, as well as a resource network that empowers and connects organizations of all sizes. Its segments include the General Markets Business Unit (the GMBU), the Enterprise Customer Business Unit (the ECBU) and the International Business Unit (the IBU). The GMBU is focused on marketing, sales, delivery and support to all emerging and mid-sized prospects and customers in North America. The ECBU is focused on marketing, sales, delivery and support to all large and/or strategic prospects and customers in North America. The IBU is focused on marketing, sales, delivery and support to all prospects and customers outside of North America. It operates in four geographic regions: the United States, Canada, Europe and Australia. Its portfolio of software and services supports nonprofit fundraising and relationship management, digital marketing, advocacy, accounting, payments and analytics.

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.

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