Sterling Check (NASDAQ:STER – Get Free Report) and Pegasystems (NASDAQ:PEGA – Get Free Report) are both business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.
Analyst Ratings
This is a summary of recent ratings for Sterling Check and Pegasystems, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sterling Check | 0 | 5 | 1 | 0 | 2.17 |
| Pegasystems | 0 | 3 | 8 | 0 | 2.73 |
Sterling Check currently has a consensus price target of $15.30, indicating a potential downside of 8.16%. Pegasystems has a consensus price target of $82.60, indicating a potential upside of 24.49%. Given Pegasystems’ stronger consensus rating and higher possible upside, analysts plainly believe Pegasystems is more favorable than Sterling Check.
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sterling Check | $736.51 million | 2.21 | -$120,000.00 | ($0.10) | -166.60 |
| Pegasystems | $1.43 billion | 3.96 | $67.81 million | $0.82 | 80.92 |
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.
Volatility & Risk
Sterling Check has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500. Comparatively, Pegasystems has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.
Institutional & Insider Ownership
84.3% of Sterling Check shares are owned by institutional investors. Comparatively, 46.9% of Pegasystems shares are owned by institutional investors. 9.9% of Sterling Check shares are owned by insiders. Comparatively, 50.1% of Pegasystems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Profitability
This table compares Sterling Check and Pegasystems’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sterling Check | -2.07% | 7.73% | 3.94% |
| Pegasystems | 8.72% | 49.62% | 11.56% |
Summary
Pegasystems beats Sterling Check on 13 of the 14 factors compared between the two stocks.
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.
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.
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