Here's How Pegasystems, Inc. Stock Rose 14% Last Month

What happened

Shares of Pegasystems (NASDAQ: PEGA) rose 14.1% in February 2018, according to data from S&P Global Market Intelligence.

So what

The maker of business and human resources management systems crushed the market in 2017, rising 31% versus the S&P 500's 19%. The good times kept on rolling in early 2018 as Pegasystems beat analyst expectations across the board in February's fourth-quarter report.

Sales increased 20% year over year to land at $239.5 million, comfortably ahead of Wall Street's $208 million target. On the bottom line, adjusted earnings fell 27% to $0.27 per share, but still smashed your average analyst's $0.15 projection.

Blue charting arrow bouncing off a trampoline and pointing up.

Image source: Getty Images.

Now what

Going forward, Pegasystems aims to decrease the average length of its customer contracts in an attempt to accelerate the renewal process. The company's products are also moving deeper and deeper into the cloud, shoring up unstable profit margins and clearing the way for the aforementioned contract-shortening ambition.

Looking back at a 44% gain over the last 52 weeks, Pegasystems shares are trading at a lofty 95 times trailing earnings today. I'm content to watch this ticker from the sidelines until a better buy-in window presents itself. Earnings surprises have been hit or miss in recent quarters, so I wouldn't be surprised to see share prices taking a temporary dive in the reasonably near future.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Pegasystems. The Motley Fool has a disclosure policy.