Progress Software Corporation

Progress Software Corporation (PRGS - Snapshot Report) continues to perform in a tough market as the company surprised on fourth-quarter estimates by 77.78%. PRGS is trading at 10.3x forward earnings.

Company Description

Progress Software provides application infrastructure software and management of business applications. The company has employees in over 90 countries. Progress supports service-oriented architecture (SOA) deployments with software products that control interactions among business services.

Progress Beats Wall Street Estimates by 77.78%

On Dec 18, Progress Software announced fourth-quarter earnings that surprised on Wall Street estimates by 77.78%, or 7 cents per share. Revenue rose 4% to $142 million compared to a year ago.

"We are particularly pleased by the strong performance delivered by our Apama product line, which grew 70% in FY08, attributable to both growth in Capital Markets and other Complex Event Processing applications," said Joseph Alsop, co-founder and chief executive officer of Progress Software.

"We continue to maintain a conservative stance with respect to our overall expense levels in light of recessionary economic conditions, while continuing to invest in our higher growth product lines," he added.

Progress Has Cash

As of the end of the fourth-quarter, the company's cash and short-term investments were $119 million. Progress also had about $65 million in investments related to municipal and student loan auction rate securities which were labeled as non-current on the balance sheet because they failed to clear at auction and the company is unable to sell them in the market. The investments currently lack short-term liquidity.

Share Repurchase Program

Progress repurchased approximately 160,000 shares for $3.2 million in the fourth-quarter under the existing repurchase program which expires on Sep 30, 2009.

2009 Guidance

Progress expects first-quarter 2009 revenue to be in the range of $125 to $127 million. EPS are forecast in the range of 37 to 39 cents.

2009 revenue is projected to be in the range of $535 to $545 million. Earnings per share for the full year are expected to be between $1.85 to $1.95.

2009 Estimates Rise

Given the company's guidance, the one covering analyst raised estimates for both the first quarter and the 2009 full year. First-quarter estimates rose 11 cents to 31 cents. 2009 estimates jumped 28% to $1.60 from $1.25. 2009 earnings are expected to grow 37.93% from 2008.

Value Fundamentals

Progress Software is a Zacks #1 Rank (strong buy) stock. It has surprised on estimates 2 out of the last 4 quarters by an average of 18.68%.

PRGS trades at 10.3x forward earnings. Its price-to-book is 1.45. The company has a solid average 5-year return on equity (ROE) of 14.04%.

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