Analyzing Oracle (NYSE:ORCL) and Pegasystems (NASDAQ:PEGA)

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Oracle and Pegasystems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oracle	1	7	28	2	2.82
Pegasystems	0	3	8	0	2.73

Oracle presently has a consensus target price of $268.27, suggesting a potential upside of 75.45%. Pegasystems has a consensus target price of $63.30, suggesting a potential upside of 112.89%. Given Pegasystems’ higher probable upside, analysts clearly believe Pegasystems is more favorable than Oracle.

Volatility & Risk

Oracle has a beta of 1.65, meaning that its share price is 65% more volatile than the S&P 500. Comparatively, Pegasystems has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Institutional and Insider Ownership

42.4% of Oracle shares are held by institutional investors. Comparatively, 46.9% of Pegasystems shares are held by institutional investors. 40.9% of Oracle shares are held by company insiders. Comparatively, 48.4% of Pegasystems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Oracle pays an annual dividend of $2.00 per share and has a dividend yield of 1.3%. Pegasystems pays an annual dividend of $0.12 per share and has a dividend yield of 0.4%. Oracle pays out 34.3% of its earnings in the form of a dividend. Pegasystems pays out 6.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Oracle has increased its dividend for 1 consecutive years. Oracle is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Oracle	25.37%	58.62%	8.36%
Pegasystems	20.04%	30.05%	14.07%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oracle	$67.36 billion	6.54	$17.09 billion	$5.83	26.23
Pegasystems	$1.75 billion	2.85	$393.44 million	$1.86	15.99

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

Summary

Oracle beats Pegasystems on 13 of the 18 factors compared between the two stocks.

About Oracle

Oracle Corporation offers products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offering include various cloud software applications, including Oracle Fusion cloud enterprise resource planning (ERP), Oracle Fusion cloud enterprise performance management, Oracle Fusion cloud supply chain and manufacturing management, Oracle Fusion cloud human capital management, Oracle Cerner healthcare, Oracle Advertising, and NetSuite applications suite, as well as Oracle Fusion Sales, Service, and Marketing. The company also offers cloud-based industry solutions for various industries; Oracle application licenses; and Oracle license support services. In addition, it provides cloud and license business' infrastructure technologies, such as the Oracle Database and MySQL Database; Java, a software development language; and middleware, including development tools and others. The company's cloud and license business' infrastructure technologies also comprise cloud-based compute, storage, and networking capabilities; and Oracle autonomous database, MySQL HeatWave, Internet-of-Things, digital assistant, and blockchain. Further, it provides hardware products and other hardware-related software offerings, including Oracle engineered systems, enterprise servers, storage solutions, industry-specific hardware, virtualization software, operating systems, management software, and related hardware services; and consulting and customer services. The company markets and sells its cloud, license, hardware, support, and services offerings directly to businesses in various industries, government agencies, and educational institutions, as well as through indirect channels. The company has a collaboration with Amdocs Limited to empower customers on their journey towards cloud and digital adoption. Oracle Corporation was founded in 1977 and is headquartered in Austin, Texas.

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.