Is Pegasystems, Inc. overvalued or undervalued?

As of 7 July 2025, Pegasystems, Inc. has moved from an attractive to a fair valuation grade. The company appears to be overvalued based on its current metrics, with a P/E ratio of 44, a Price to Book Value of 14.35, and an EV to EBITDA of 28.79, all of which are higher than several peers. For instance, CACI International, Inc. has a P/E of 39.26 and an EV to EBITDA of 23.43, indicating that Pegasystems is trading at a premium compared to its competitors.
Despite its strong performance, with a year-to-date return of 28.07% compared to the S&P 500's 12.22%, the valuation ratios suggest that the stock is not justified at its current price level. The PEG ratio of 0.84 indicates a potentially favorable growth outlook, but the high P/E and Price to Book ratios raise concerns about sustainability at these levels. Overall, Pegasystems seems to be overvalued relative to its peers and the broader market context.