Analyzing Simulations Plus (NASDAQ:SLP) & Pegasystems (NASDAQ:PEGA)

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Simulations Plus and Pegasystems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simulations Plus	0	5	4	0	2.44
Pegasystems	0	2	7	0	2.78

Simulations Plus currently has a consensus target price of $24.40, indicating a potential upside of 61.91%. Pegasystems has a consensus target price of $61.83, indicating a potential upside of 7.54%. Given Simulations Plus’ higher possible upside, equities analysts clearly believe Simulations Plus is more favorable than Pegasystems.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simulations Plus	$70.01 million	4.33	$9.95 million	($3.15)	-4.78
Pegasystems	$1.50 billion	6.57	$99.19 million	$1.16	49.57

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Simulations Plus	-78.63%	11.62%	10.84%
Pegasystems	13.14%	42.42%	16.24%

Volatility & Risk

Simulations Plus has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Pegasystems has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Insider and Institutional Ownership

78.1% of Simulations Plus shares are owned by institutional investors. Comparatively, 46.9% of Pegasystems shares are owned by institutional investors. 19.4% of Simulations Plus shares are owned by insiders. Comparatively, 50.1% of Pegasystems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Pegasystems beats Simulations Plus on 12 of the 14 factors compared between the two stocks.

About Simulations Plus

Simulations Plus, Inc. develops drug discovery and development software for modeling and simulation, and prediction of molecular properties utilizing artificial intelligence and machine learning based technology worldwide. The company operates through two segments, Software and Services. It offers GastroPlus, which simulates the absorption and drug interaction of compounds administered to humans and animals; and DDDPlus and MembranePlus simulation products. The company also provides products based on mechanistic and mathematical models, such as DILIsym, NAFLDsym, ILDsym, RENAsym, IPFsym, and MITOsym products. In addition, it offers Absorption, Distribution, Metabolism, Excretion, and Toxicity Predictor for chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, as well as MonolixSuite products for modeling and simulation that allows for population analyses, rapid clinical trial data analyses, and regulatory submissions. Further, the company provides clinical-pharmacology-based consulting services, which includes population pharmacokinetic and pharmacodynamic modeling, exposure-response analyses, clinical trial simulations, data programming, and technical writing services in support of regulatory submissions; and early drug discovery services. Additionally, it offers creative and insightful consulting services to support its quantitative systems pharmacology/quantitative systems toxicology modelling. The company serves pharmaceutical, biotechnology, agrochemical, cosmetics, and food industry companies, as well as academic and regulatory agencies. Simulations Plus, Inc. was incorporated in 1996 and is headquartered in Lancaster, 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.