Head-To-Head Analysis: Pegasystems (NASDAQ:PEGA) versus Sterling Check (NASDAQ:STER)

Pegasystems (NASDAQ:PEGA) and Sterling Check (NASDAQ:STER) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.

Insider and Institutional Ownership

46.9% of Pegasystems shares are owned by institutional investors. Comparatively, 84.3% of Sterling Check shares are owned by institutional investors. 50.1% of Pegasystems shares are owned by insiders. Comparatively, 9.9% of Sterling Check shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Pegasystems has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Sterling Check has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.

Valuation & Earnings

This table compares Pegasystems and Sterling Check”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pegasystems	$1.43 billion	4.01	$67.81 million	$0.82	82.06
Sterling Check	$719.64 million	2.26	-$120,000.00	($0.10)	-166.20

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

Profitability

This table compares Pegasystems and Sterling Check’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pegasystems	8.72%	49.62%	11.56%
Sterling Check	-2.07%	7.73%	3.94%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Pegasystems and Sterling Check, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pegasystems	0	3	8	0	2.73
Sterling Check	0	5	1	0	2.17

Pegasystems currently has a consensus price target of $82.60, suggesting a potential upside of 22.75%. Sterling Check has a consensus price target of $15.30, suggesting a potential downside of 7.94%. Given Pegasystems’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Pegasystems is more favorable than Sterling Check.

Summary

Pegasystems beats Sterling Check on 13 of the 14 factors compared between the two stocks.

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.

About Sterling Check

Sterling Check Corp. provides technology-enabled background and identity verification services in the United States, Canada, Europe, the Middle East and Africa, and the Asia Pacific. The company offers identity verification services, such as telecom and device verification, identification document verification, facial recognition with biometric matching, social security number verification, and live video chat identification proofing; fingerprinting; background checks, including criminal record checks, sex offender registries, civil court records, motor vehicle and driving license records, executive investigations, credit reports, social media searches, and contingent workforce solutions; liens, judgments, and bankruptcies; and sanctions, risk, and compliance checks. It also provides credential verification services, which include employment verification, education verification, credential verification, professional reference checks, and department of transportation; drug and health screening; onboarding solutions, including Sterling I-9 that integrates a suite of screening and onboarding services and onboarding forms; and workforce, medical license, and motor vehicle records monitoring solutions. The company's services are delivered through its cloud-based technology platform that empowers organizations with real-time and data-driven insights to conduct and manage their employment screening programs. It serves a client base in a range of industries, such as healthcare, gig economy, financial and business services, industrials, retail, contingent, technology, media and entertainment, transportation and logistics, hospitality, education, and government. The company was formerly known as Sterling Ultimate Parent Corp. and changed its name to Sterling Check Corp. in August 2021. Sterling Check Corp. was founded in 1975 and is headquartered in Independence, Ohio.