Progress Software (PRGS): Helping enterprise develop more effective software applications

The company pleased investors last week when it announced Q4 EPS of 54 cents and revenues of $136.8 million. Analysts had been expecting 52 cents and $128.9 million. Management also guided Q1 EPS to 40-42 cents (41 cent consensus), Q1 revenues to $120-$122 million ($122.06M consensus), FY08 EPS to $1.90-$1.96 ($1.91 consensus) and FY08 revenues to $515-$525 million ($512.97M consensus). PRGS shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with two "strong buys" and three "buys." Analysts see an 18 percent average annual growth rate through the next five years. The PRGS Price to Sales ratio (2.87), Price to Book ratio (2.73) and EPS Growth rate (68.75%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95 percent of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $26.61 and $34.45. A stop-loss of $29.00 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He holds no positions in any of the stocks mentioned above.