Financial Contrast: Adobe (NASDAQ:ADBE) versus Pegasystems (NASDAQ:PEGA)

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

Earnings and Valuation

This table compares Adobe and Pegasystems”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adobe	$23.77 billion	4.23	$7.13 billion	$17.17	14.48
Pegasystems	$1.75 billion	4.24	$393.44 million	$2.13	20.56

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

Institutional and Insider Ownership

81.8% of Adobe shares are owned by institutional investors. Comparatively, 46.9% of Pegasystems shares are owned by institutional investors. 0.2% of Adobe shares are owned by insiders. Comparatively, 50.1% of Pegasystems shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Adobe	29.48%	64.48%	25.71%
Pegasystems	22.54%	38.86%	18.27%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adobe	5	15	10	1	2.23
Pegasystems	0	2	8	1	2.91

Adobe presently has a consensus price target of $339.88, indicating a potential upside of 36.70%. Pegasystems has a consensus price target of $64.10, indicating a potential upside of 46.35%. Given Pegasystems’ stronger consensus rating and higher probable upside, analysts plainly believe Pegasystems is more favorable than Adobe.

Volatility & Risk

Adobe has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500. Comparatively, Pegasystems has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.

Summary

Adobe beats Pegasystems on 9 of the 14 factors compared between the two stocks.

About Adobe

Adobe Inc., together with its subsidiaries, operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content; and Document Cloud, a unified cloud-based document services platform. Its flagship product is Creative Cloud, a subscription service that allows members to access its creative products. This segment serves content creators, students, workers, marketers, educators, enthusiasts, and communicators. The Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences from analytics to commerce. This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, and executives across the C-suite. The Publishing and Advertising segment offers products and services, such as e-learning solutions, technical document publishing, web conferencing, document and forms platform, web application development, and high-end printing, as well as Advertising Cloud offerings. It also provides consulting, technical support, and learning services. The company offers its products and services directly to enterprise customers through its sales force and local field offices, as well as to end users through app stores and through its website at adobe.com. It also distributes products and services through distributors, value-added resellers, systems integrators, software vendors and developers, retailers, and original equipment manufacturers. The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. Adobe Inc. was founded in 1982 and is headquartered in San Jose, 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.