Reviewing Pegasystems (NASDAQ:PEGA) and eGain (NASDAQ:EGAN)

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for eGain and Pegasystems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
eGain	0	3	1	0	2.25
Pegasystems	0	7	6	0	2.46

eGain presently has a consensus target price of $15.25, suggesting a potential upside of 113.41%. Pegasystems has a consensus target price of $50.10, suggesting a potential upside of 46.11%. Given eGain’s higher possible upside, research analysts clearly believe eGain is more favorable than Pegasystems.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
eGain	$88.43 million	2.22	$32.25 million	$1.38	5.18
Pegasystems	$1.75 billion	3.23	$393.44 million	$1.77	19.37

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.

Volatility and Risk

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

Profitability

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

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

Insider & Institutional Ownership

53.9% of eGain shares are owned by institutional investors. Comparatively, 46.9% of Pegasystems shares are owned by institutional investors. 38.7% of eGain shares are owned by insiders. Comparatively, 48.4% of Pegasystems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

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

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.

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.