Although massive supply chain disruptions, the Fed's interest rate increases to curb inflation, and the shortage of semiconductor chips have posed a significant threat to the overall tech industry’s growth, most companies in this space are poised to grow on account of increasing hybrid working trends, rapid digitization, and increasing business automation.
Furthermore, the need for data analytics has grown in tandem with the expansion of businesses’ operations. The global software market is expected to reach $608.70 billion in 2022.
Therefore, we think that if one missed the opportunity to buy the dip in software stocks, one could bet now on PTC Inc. (PTC), National Instruments Corporation (NATI), and Progress Software Corporation (PRGS) because these names still look attractive at their current price levels.
Click here to check out our Software Industry Report for 2022
PTC Inc. (PTC)
PTC is a software and services company in the Americas, Europe, and the Asia Pacific. The Needham, Mass.-based concern operates in two segments: Software Products and Professional Services. It offers the ThingWorx platform, which provides capabilities that enable enterprises to digitally transform every aspect of their business with innovative solutions.
In January, PLC, and global automotive and industrial supplier Schaeffler announced a new alliance that will allow Schaeffler to standardize PTC solutions to deploy an integrated, end-to-end IT landscape. Schaeffler will also employ PTC's efforts to better develop market-specific standard solutions to meet the needs of automotive and industrial companies. This new partnership will build on the successful 20-year relationship based on Schaeffler's use of PTC's CAD and PLM solutions.
PTC's total revenue increased 6.7% year-over-year to $457.72 million during the first quarter, ending Dec. 31, 2021. Its non-GAAP operating income grew 3.1% from its year-ago value to $158.14 million, while its non-GAAP net income came in at $113.06 million. The company's non-GAAP EPS stood at $0.95 over the period.
The $1.13 EPS estimate during its fiscal second quarter, ending March 31, 2022, represents 4.6% year-over-year growth. Analysts expect its revenue to increase 4.3% year-over-year to $481.77 million for the second quarter, ending March 31, 2022. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has declined 27.4% in price over the past year. In addition, closing yesterday's trading session at $104.00, the stock is currently trading 32.3% below its 52-week high of $153.73, which it hit on July 23, 2021.
PTC's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
PTC is also rated a B grade for Quality. Within the F-rated Software - Application industry, it is ranked #27 of 158 stocks.
To see additional POWR Ratings for Growth, Value, Momentum, Stability, and Sentiment for PTC, click here.
National Instruments Corporation (NATI)
NATI in Austin, Tex., offers a software-centric platform and systems to engineers and scientists worldwide. Its programming environments software includes NI LabVIEW, a graphical software platform to visualize hardware configuration, measurement data, and debugging of applications; NI LabWindows/CVI, an ANSI C integrated development environment and engineering toolbox; and NI Measurement Studio, a suite of .NET tools for building engineering applications in Microsoft Visual Studio.
During the fourth quarter, ending Dec. 31, 2021, NATI's non-GAAP net sales increased 13.8% year-over-year to $420.99 million. Its non-GAAP operating income improved 22% from its year-ago value to $96.24 million, while its non-GAAP net income grew 19.8% from its prior-year quarter to $79.78 million. The company's non-GAAP EPS increased 17.6% year-over-year to $0.60.
The $0.43 consensus EPS estimate represents a 33.9% year-over-year improvement during the first quarter, ending March 31, 2022. Analysts expect NATI's revenue to increase 19.9% year-over-year to $401.98 million for the same period. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has plunged 7.4% in price year-to-date. However, the company's shares have soared 5.9% over the past month. Furthermore, closing yesterday's trading session at $40.46, the stock is currently trading 12.8% below its 52-week high of $46.42, which it hit on April 29, 2021.
NATI's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Sentiment and a B grade for Growth and Quality. In the Software - Application industry, it is ranked #12.
In total, we rate NATI on eight distinct levels. Beyond what we have stated above, we have also given NATI grades for Value, Stability, and Momentum. Get all the NATI ratings here.
Progress Software Corporation (PRGS)
PRGS develops, deploys, and manages business applications. The Bedford, Mass., company offers OpenEdge, a development software that builds multi-language applications for secure deployment across various platforms and devices, as well as cloud; developer tools that comprise components for user interface development for Web, mobile, desktop, chat; and AR/VR apps, as well as automated application testing and reporting tools.
Last month PRGS announced the latest release of Progress® WhatsUp® Gold, its award-winning IT infrastructure monitoring software. The release of WhatsUp Gold came less than six months after PRGS' acquisition of Kemp. PRGS has introduced integration with the comprehensive network traffic performance monitoring and diagnostics capabilities of Progress® Flowmon® along with the monitoring of Progress® LoadMaster®. PRGS now provides organizations a comprehensive and easy-to-understand view of their networks' performance from a single pane of glass.
In the first quarter, ending Feb. 28, 2022, PRGS' non-GAAP revenue increased 11.9% year-over-year to $147.51 million. Its non-GAAP income from operations grew 3.7% from its year-ago value to $58.73 million, while its non-GAAP net income amounted to $43.56 million, up 2.5% from its prior-year quarter. The company's non-GAAP EPS rose 2.1% from its previous period to $0.97.
Analysts expect PRGS' revenue to increase 13.4% year-over-year to $146.45 million for its second quarter, ending May 31, 2022. The $0.95 consensus EPS estimate for the second quarter, ending May 31, 2022, represents a 15.9% improvement year-over-year. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has declined 5.22% in price year-to-date. However, it has gained 6.6% over the past month. In addition, closing yesterday's trading session at $45.75, the stock is currently trading 15.3% below its 52-week high of $53.99, which it hit on November 17, 2021.
It is no surprise that PRGS has an overall A rating, which equates to Strong Buy in our POWR Ratings system. PRGS has an A grade for Quality and a B grade for Value and Growth. Within the Software - Application industry, it is ranked #3.
Click here to see the additional POWR Ratings for PRGS (Momentum, Stability, and Sentiment).
Click here to check out our Software Industry Report for 2022
PTC shares were trading at $103.42 per share on Friday afternoon, down $0.58 (-0.56%). Year-to-date, PTC has declined -14.63%, versus a -5.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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