Contrasting eGain (NASDAQ:EGAN) & Pegasystems (NASDAQ:PEGA)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pegasystems	18.66%	32.21%	14.57%
eGain	41.68%	12.56%	7.48%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pegasystems	$1.74 billion	3.46	$393.44 million	$1.77	20.65
eGain	$88.43 million	2.34	$32.25 million	$1.38	5.46

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

Risk & Volatility

Pegasystems has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, eGain has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Institutional & Insider Ownership

46.9% of Pegasystems shares are held by institutional investors. Comparatively, 53.9% of eGain shares are held by institutional investors. 48.4% of Pegasystems shares are held by insiders. Comparatively, 38.7% of eGain 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.

Analyst Recommendations

This is a summary of current ratings and target prices for Pegasystems and eGain, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pegasystems	1	6	6	0	2.38
eGain	0	3	1	0	2.25

Pegasystems presently has a consensus target price of $50.10, suggesting a potential upside of 37.08%. eGain has a consensus target price of $15.25, suggesting a potential upside of 102.39%. Given eGain’s higher possible upside, analysts clearly believe eGain is more favorable than Pegasystems.

Summary

Pegasystems beats eGain on 11 of the 14 factors compared between the two stocks.

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.

About eGain

eGain Corporation develops, licenses, implements, and supports customer service infrastructure software solutions in North America, Europe, the Middle East, Africa, and the Asia Pacific. It provides eGain Knowledge Hub, which helps businesses to centralize knowledge, policies, procedures, situational expertise, best-practices, while delivering guided, and personalized solutions to customers and agents; eGain Conversation Hub for digital-first, omnichannel interaction management within a modern, purpose-built desktop; and eGain Analytics Hub enables clients to measure, manage, and optimize omnichannel service operations and knowledge. The company also offers subscription services that provides customers with access to its software on a cloud-based platform; and professional services, such as consulting and implementation, training, and managed services. It serves customers in various industry sectors, including the financial services, telecommunications, retail, government, healthcare, and utilities. The company was incorporated in 1997 and is headquartered in Sunnyvale, California.