Critical Review: Pegasystems (NASDAQ:PEGA) & Onespan (NASDAQ:OSPN)

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

Dividends

Onespan pays an annual dividend of $0.52 per share and has a dividend yield of 3.2%. Pegasystems pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Onespan pays out 29.2% of its earnings in the form of a dividend. Pegasystems pays out 6.8% 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.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Onespan	$243.18 million	2.50	$72.90 million	$1.78	9.26
Pegasystems	$1.75 billion	3.36	$393.44 million	$1.77	20.18

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

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Onespan	0	3	1	0	2.25
Pegasystems	1	6	6	0	2.38

Onespan currently has a consensus target price of $17.00, suggesting a potential upside of 3.09%. Pegasystems has a consensus target price of $50.10, suggesting a potential upside of 40.26%. Given Pegasystems’ stronger consensus rating and higher probable upside, analysts clearly believe Pegasystems is more favorable than Onespan.

Risk & Volatility

Onespan has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500. Comparatively, Pegasystems has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Onespan	27.76%	16.91%	11.81%
Pegasystems	18.66%	32.21%	14.57%

Insider & Institutional Ownership

95.5% of Onespan shares are held by institutional investors. Comparatively, 46.9% of Pegasystems shares are held by institutional investors. 2.0% of Onespan shares are held by company insiders. Comparatively, 48.4% of Pegasystems shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Pegasystems beats Onespan on 11 of the 16 factors compared between the two stocks.

About Onespan

OneSpan Inc., together with its subsidiaries, designs, develops, and markets digital solutions for identity, authentication, and secure digital agreements worldwide. The company offers OneSpan Sign, a range of e-signature requirements for occasional agreement to processing tens of thousands of transactions; OneSpan Cloud Authentication, a cloud-based multifactor authentication solution that supports a range of authentication options, including biometrics, push notification, and visual cryptograms for transaction data security, SMS, and hardware authenticators; and OneSpan Identity Verification, which enables banks and financial institutions identity verification services. It also provides Mobile Security Suite, a software development kit that protect mobile transactions; Digipass Authenticators, consisting of a wide variety of authentication devices; authentication servers that provides a range of strong authentication utilities and solutions designed to allow organizations to securely authenticate users and transactions; and Digipass FX1 BIO, a physical passkey with fingerprint scan built for the workforce authentication market. In addition, it offers Virtual Room, a purpose-built, high-assurance solution that blends the simplicity of a consumer video collaboration app with high-assurance identity and authentication security; OneSpan Notary, an online notary solution developed for organizations with in-house notaries; and OneSpan Trust Vault, a blockchain-based decentralized digital storage solution that helps organizations meet compliance, regulatory, and chain of custody requirements for critical documents. It sells its solutions through its direct sales force, as well as through distributors, resellers, systems integrators, and original equipment manufacturers. The company was formerly known as VASCO Data Security International, Inc. and changed its name to OneSpan Inc. in May 2018. OneSpan Inc. was founded in 1991 and is headquartered in Boston, Massachusetts.

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.