Head to Head Survey: SAP (NYSE:SAP) & Pegasystems (NASDAQ:PEGA)

SAP (NYSE:SAP) and Pegasystems (NASDAQ:PEGA) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their risk, dividends, valuation, institutional ownership, profitability, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for SAP and Pegasystems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SAP	0	0	11	1	3.08
Pegasystems	0	2	7	0	2.78

SAP currently has a consensus target price of $281.6667, indicating a potential downside of 3.55%. Pegasystems has a consensus target price of $61.8333, indicating a potential upside of 20.72%. Given Pegasystems’ higher possible upside, analysts plainly believe Pegasystems is more favorable than SAP.

Dividends

SAP pays an annual dividend of $1.84 per share and has a dividend yield of 0.6%. Pegasystems pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. SAP pays out 30.5% of its earnings in the form of a dividend. Pegasystems pays out 10.3% 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.

Institutional & Insider Ownership

46.9% of Pegasystems shares are held by institutional investors. 7.4% of SAP shares are held by insiders. Comparatively, 49.7% of Pegasystems 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.

Risk & Volatility

SAP has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, Pegasystems has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Profitability

This table compares SAP and Pegasystems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SAP	18.26%	14.84%	9.01%
Pegasystems	13.14%	42.42%	16.24%

Earnings and Valuation

This table compares SAP and Pegasystems”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SAP	$36.99 billion	9.70	$3.38 billion	$6.04	48.35
Pegasystems	$1.50 billion	5.85	$99.19 million	$1.16	44.16

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

Summary

SAP beats Pegasystems on 11 of the 17 factors compared between the two stocks.

About SAP

SAP SE, together with its subsidiaries, provides applications, technology, and services worldwide. It offers SAP S/4HANA that provides software capabilities for finance, risk and project management, procurement, manufacturing, supply chain and asset management, and research and development; SAP SuccessFactors solutions for human resources, including HR and payroll, talent and employee experience management, and people and workforce analytics; and spend management solutions that covers direct and indirect spend, travel and expense, and external workforce management. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to build, integrate, and automate applications; and SAP Business Network, a business-to-business collaboration platform that helps digitalize key business processes across the supply chain and enables communication between trading partners. In addition, it offers SAP Signavio to help customers to discover, analyze, and understand their business process operations; SAP's industry cloud solutions that provides modular solutions addressing industry-specific functions; Taulia solutions for working capital management to help enable customers mitigate the effects of inflation by providing visibility into working capital and access to liquidity; and sustainability solutions and services. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.

About Pegasystems

Pegasystems Inc. develops, markets, licenses, hosts, and supports enterprise software in the United States, rest of the Americas, the United Kingdom, rest of Europe, the Middle East, Africa, and the Asia-Pacific. The company provides Pega Infinity, a software portfolio comprising of Pega Customer Decision Hub, a real-time AI-powered decision engine to enhance customer acquisition and experiences across inbound, outbound, and paid media channels; Pega Customer Service to anticipate customer needs, connect customers to people and systems, and automate customer interactions to evolve the customer service experience, as well as to allow enterprises to deliver interactions across channels and enhance employee productivity; and Pega Platform, an intelligent automation software for increasing efficiency of clients’ processes and workflows. It also offers Situational Layer Cake that organizes logic into layers that map to the unique dimensions of a client’s business, such as customer types, lines of business, geographies, etc.; Pega Express Methodology and low code that connects enterprise data and systems to customer experience channels; Pega Cloud that allows clients to develop, test, and deploy applications; Pega Catalyst, which helps clients to transform and prototype their customer journeys; Pega Academy, which offers instructor-led and online training to its employees, clients, and partners; and global service assurance and client support services. It primarily markets its software and services to financial services, healthcare, communications and media, government, insurance, manufacturing and high tech, and consumer services markets through a direct sales force, as well as partnerships with technology providers and application developers. Pegasystems Inc. was incorporated in 1983 and is headquartered in Cambridge, Massachusetts.