Pegasystems rises 3.4% after third-quarter results miss estimates

What happened

Pegasystems (PEGA) rose 3.4% on October 20, 2026, after reporting third-quarter earnings that fell short of estimates as investors reacted to the results. The company posted earnings per share of $0.35 against $0.45 expected, 23.1% below the Zacks Consensus Estimate, and reported revenue for the four quarters through September 30, 2026, of $1.75 billion, which grew 0.9% from a year earlier.

How big was the move

The stock closed at $36.23 after opening 0.9% above the previous close. The shares rose 5.4% over the last five sessions and traded at 4.1 times their 20-day average volume, suggesting heavier-than-normal activity. The S&P 500 rose 0.3% on the day while the Technology sector median rose 1.2%; the stock’s session performance was 2.2 percentage points better than the sector median. The move equated to 1.3 times a typical daily move for this stock and reflects a market that tends to amplify company news, given a beta of 1.46.

The technical picture

The stock traded 4.9% above its 20-day moving average and 3.9% above its 50-day moving average, while sitting 4.7% below its 200-day moving average. The 50-day average is below the 200-day average, a sign of a weak longer-term trend. The Relative Strength Index (14 days) was 57, in a neutral range between 30 and 70. Over one month the stock rose 3.6% and over three months it rose 39.4%, yet over one year it fell 32.1%, leaving it 47.9 percentage points behind the S&P 500 for the year. Volatility stood at 43% annualized over 60 days, lower than 65% of its own readings over five years, and the shares were 46.8% below the 52-week high.

Fundamentals and valuation

For the four quarters through September 30, 2026, Pegasystems reported revenue of $1.75 billion, which grew 0.9% from a year earlier, and diluted earnings per share of $1.61, which rose 8.8% from a year earlier. Gross margin ticked up to 75.9% from 75.7% a year earlier, while operating margin narrowed to 9.9% from 17.4% a year earlier. Free-cash-flow margin was 25.9% and return on invested capital was 25.4%, pointing to strong cash conversion despite the margin compression.

The balance sheet showed net cash of $133.2 million and the share count over one year decreased by 8.4%, which can support per-share metrics. Valuation measures included 22.5 times trailing earnings, price to forward earnings of 15.1 times expected earnings and a free-cash-flow yield of 8.0%. The trailing multiple is lower than 67% of its own readings over the past five years; the five-year median was 41.3 times earnings, indicating the stock trades at a discount to its recent history even as growth metrics are modest.

Earnings and analyst expectations

Pegasystems reported on October 20, 2026, with earnings per share of $0.35 against $0.45 expected, 23.1% below estimates, and compared with $0.30 per share a year earlier. The company has recorded zero consecutive quarters beating estimates and the average surprise over the last four reports was 16.5% below estimates. Typical two-day reaction after recent reports was to have the stock rose 0.4%.

Analysts’ consensus price target was $36.40, 0.5% above the closing price, based on ratings from 24 analysts; 50% of those ratings were Buy or Strong Buy and the consensus rating was Buy. The next report is scheduled for February 9, 2027.

What to watch

• October 20, 2026: Third-quarter earnings per share of $0.35, 23.1% below the Zacks Consensus Estimate of $0.45.
• February 9, 2027: Next scheduled earnings report date.
• Share count over one year decreased by 8.4% and the company reported net cash of $133.2 million.
• Valuation metrics: 22.5 times trailing earnings and 15.1 times price to forward earnings.
• PromtFinance scores: Value 76 (Positive), Quality 95 (Exceptional), Growth 21 (Very weak), Momentum 25 (Very weak), Revisions 4 (Very weak), Stability 69 (Positive).