LegalZoom.com (NASDAQ:LZ) & Pegasystems (NASDAQ:PEGA) Critical Survey

Pegasystems (NASDAQ:PEGAGet Rating) and LegalZoom.com (NASDAQ:LZGet Rating) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.

Earnings and Valuation

This table compares Pegasystems and LegalZoom.com’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pegasystems $1.21 billion 3.52 -$63.04 million ($0.72) -72.39
LegalZoom.com $575.08 million 4.76 -$108.66 million ($0.77) -17.91

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

Analyst Ratings

This is a breakdown of current ratings and price targets for Pegasystems and LegalZoom.com, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pegasystems 0 5 3 0 2.38
LegalZoom.com 0 4 6 0 2.60

Pegasystems currently has a consensus price target of $95.56, suggesting a potential upside of 83.34%. LegalZoom.com has a consensus price target of $26.25, suggesting a potential upside of 90.36%. Given LegalZoom.com’s stronger consensus rating and higher possible upside, analysts plainly believe LegalZoom.com is more favorable than Pegasystems.

Profitability

This table compares Pegasystems and LegalZoom.com’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pegasystems -4.46% -10.05% -2.88%
LegalZoom.com -21.77% -1,446.94% -29.38%

Insider and Institutional Ownership

48.6% of Pegasystems shares are held by institutional investors. Comparatively, 51.2% of LegalZoom.com shares are held by institutional investors. 50.5% of Pegasystems shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Pegasystems beats LegalZoom.com on 7 of the 13 factors compared between the two stocks.

About Pegasystems (Get Rating)

Pegasystems Inc. develops, markets, licenses, hosts, and supports enterprise software applications in the United States, rest of the Americas, the United Kingdom, rest of Europe, the Middle East, Africa, and the Asia-Pacific. It provides Pega Platform, an application development product for clients; and Pega Infinity, a software platform that unifies customer engagement and digital process automation. The company also offers customer engagement applications, including Pega Customer Decision Hub that enable enterprises to enhance customer acquisition and experiences across inbound, outbound, and paid media channels; Pega Sales Automation to automate and manage the sales process; and 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. In addition, it provides intelligent automation software; Pega Cloud that allows clients to develop, test, and deploy applications and the Pega Platform using an Internet-based infrastructure; Pega Academy, which offers instructor-led and online training to its employees, clients, and partners; and guidance, implementation, and technical support services. The company primarily markets its software and services to financial services, life sciences, 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.

About LegalZoom.com (Get Rating)

LegalZoom.com, Inc. operates an online platform for legal and compliance solutions in the United States. The company's platform offers products and services, including business formations, creating estate planning documents, protecting intellectual property, completing certain forms and agreements, providing access to independent attorney advice, and connecting customers with experts for tax preparation and bookkeeping services. It serves small businesses and individuals. LegalZoom.com, Inc. was incorporated in 1999 and is headquartered in Glendale, California.

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