Contrasting Pegasystems (NASDAQ:PEGA) & Salesforce (NYSE:CRM)

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

Insider and Institutional Ownership

80.4% of Salesforce shares are owned by institutional investors. Comparatively, 46.9% of Pegasystems shares are owned by institutional investors. 3.0% of Salesforce shares are owned by company insiders. Comparatively, 50.1% of Pegasystems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Salesforce pays an annual dividend of $1.66 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%. Salesforce pays out 22.2% of its earnings in the form of a dividend. Pegasystems pays out 8.1% 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. Salesforce has raised its dividend for 1 consecutive years. Salesforce is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Salesforce has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, Pegasystems has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Salesforce	$37.90 billion	6.34	$6.20 billion	$7.49	34.21
Pegasystems	$1.50 billion	6.66	$99.19 million	$1.49	39.40

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Salesforce	17.91%	14.41%	8.89%
Pegasystems	16.05%	43.49%	18.42%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Salesforce	1	13	29	1	2.68
Pegasystems	0	2	9	0	2.82

Salesforce currently has a consensus price target of $327.74, indicating a potential upside of 27.92%. Pegasystems has a consensus price target of $70.05, indicating a potential upside of 19.32%. Given Salesforce’s higher probable upside, analysts clearly believe Salesforce is more favorable than Pegasystems.

Summary

Salesforce beats Pegasystems on 11 of the 18 factors compared between the two stocks.

About Salesforce

Salesforce, Inc. provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. The company's service includes sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and artificial intelligence, and deliver quotes, contracts, and invoices; and service that enables companies to deliver trusted and highly personalized customer support at scale. In addition, its platform offering comprise a flexible platform that enables companies of various sizes, locations, and industries to build business workflow and apps with customer; online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, an intelligent productivity platform. The company's marketing services enables companies to plan, personalize, automate, and optimize customer marketing journey, connecting interaction, and connected products; and commerce services, which empowers shopping experience across various customer touchpoint, such as mobile, web, social, and stores and provides click-to-code tools that offers customers to build and deploy solutions. Further, its analytics offering includes Tableau, an end-to-end analytics solution for range of enterprise use cases and intelligent analytics with AI models, spot trends, predict outcomes, creates summaries, timely recommendations, and take action from any device; and integration service including MuleSoft, which provides building blocks to deliver end-to-end and connected experiences. Additionally, the company provides data cloud, a hyperscale data engine native to Salesforce; vertical services to meet the needs of customers in industries, such as financial services, healthcare and life sciences, manufacturing and automotive and government; and offers salesforce starter for small and medium-sized businesses. Salesforce, Inc. was incorporated in 1999 and is headquartered in San Francisco, California.

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.