Is Pegasystems (PEGA) Pricing Look Attractive After Recent Share Price Pullback?

Simply Wall St

Tue, February 24, 2026 at 2:08 PM GMT+9 5 min read

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PEGA

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If you are wondering whether Pegasystems is attractively priced at its current level, you are not alone. The stock often draws attention from investors trying to work out if the recent price reflects its underlying worth.

The share price closed at US$41.98, with returns of a 4.3% decline over 7 days, a 16.7% decline over 30 days, a 25.1% decline year to date, a 7.6% gain over 1 year, an 82.4% gain over 3 years, and a 37.7% decline over 5 years, so the recent pullback sits against a mixed longer term track record.

Recent news around Pegasystems has focused on ongoing interest in software and automation providers, which can influence how investors think about the company’s growth prospects and risk profile. At the same time, broader sector sentiment and macro headlines have been important drivers for many software names, adding context to Pegasystems’ recent share price moves.

On Simply Wall St’s framework, Pegasystems currently holds a valuation score of 4 out of 6. This suggests several checks point to the shares trading below estimated fair value. Next, we will look at traditional valuation approaches like multiples and discounted cash flow before finishing with a more complete way to think about what the stock might be worth over time.

Pegasystems delivered 7.6% returns over the last year. See how this stacks up to the rest of the Software industry.

Approach 1: Pegasystems Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes projected future cash flows, then discounts them back to what they might be worth in today’s dollars. It is essentially asking what Pegasystems’ future cash generation could be worth right now.

Pegasystems’ latest twelve month free cash flow stands at about $490.7 million. Using a 2 Stage Free Cash Flow to Equity model, analysts and extrapolations feed in a series of future cash flows, including a projected free cash flow of $402.3 million in 2030. Estimates are provided directly by analysts for the earlier years, while later years are extrapolated by Simply Wall St based on those inputs.

When all those projected cash flows are discounted back and summed, the model arrives at an estimated intrinsic value of about $34.22 per share. Compared with the recent share price of $41.98, this particular DCF output suggests Pegasystems is around 22.7% overvalued on this framework.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Pegasystems may be overvalued by 22.7%. Discover 56 high quality undervalued stocks or create your own screener to find better value opportunities.

Story Continues  

PEGA Discounted Cash Flow as at Feb 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Pegasystems.

Approach 2: Pegasystems Price vs Earnings

For profitable companies, the P/E ratio is a useful shortcut because it links what you pay for the stock today to the earnings the business is already generating. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when growth is more modest or risks feel higher.

Pegasystems currently trades on a P/E of 18.0x. That sits below both the Software industry average P/E of 24.3x and the peer average of 22.1x, which might initially suggest the shares are priced more conservatively than many comparable names.

Simply Wall St’s Fair Ratio for Pegasystems is 26.1x. This is a proprietary estimate of what a reasonable P/E could be, based on factors like the company’s earnings growth profile, profit margins, industry, market cap and specific risks. Because it blends these company level inputs instead of relying only on broad peer or industry comparisons, the Fair Ratio aims to give a more tailored view of what investors might typically pay for Pegasystems’ earnings.

Comparing the current P/E of 18.0x with the Fair Ratio of 26.1x, the shares screen as undervalued on this metric.

Result: UNDERVALUED

NasdaqGS:PEGA P/E Ratio as at Feb 2026

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Upgrade Your Decision Making: Choose your Pegasystems Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which are simple stories that you and other investors build around Pegasystems. You do this by tying your view of its products, competition, growth, margins and risks to specific forecasts for future revenue, earnings and a fair value estimate. All of this happens inside the Simply Wall St Community page, which is used by millions of investors. You can then compare that fair value to the current share price and decide whether the stock looks attractive or not. You can also see how those Narratives update automatically when new earnings or news on areas like AI Blueprint, cloud migration or buybacks come through. In addition, you can weigh very different views, for example a more optimistic Pegasystems Narrative that assumes a fair value of about US$72.09 against a more cautious one closer to US$59.63, and then judge for yourself which story feels more realistic.

Do you think there’s more to the story for Pegasystems? Head over to our Community to see what others are saying!

NasdaqGS:PEGA 1-Year Stock Price Chart

_ This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned._

Companies discussed in this article include PEGA.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

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