NOT FOR DISTRIBUTION
Header cover image

Magic Software Enterprises

Market Cap

US$828.3m

Last Updated

2021/04/18 23:04 UTC

Data Sources

Company Financials +

Executive Summary

Magic Software Enterprises Ltd. provides proprietary application development, business process integration, vertical software solutions, and information technologies (IT) outsourcing software services in Israel and internationally. More Details


Snowflake Analysis

Solid track record with excellent balance sheet.


Similar Companies

Share Price & News

How has Magic Software Enterprises's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MGIC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: MGIC's weekly volatility (4%) has been stable over the past year.


Market Performance


7 Day Return

-0.2%

MGIC

2.3%

US Software

1.3%

US Market


1 Year Return

85.9%

MGIC

56.0%

US Software

53.8%

US Market

Return vs Industry: MGIC exceeded the US Software industry which returned 56% over the past year.

Return vs Market: MGIC exceeded the US Market which returned 53.8% over the past year.


Shareholder returns

MGICIndustryMarket
7 Day-0.2%2.3%1.3%
30 Day-3.4%11.1%5.1%
90 Day-4.0%12.0%8.9%
1 Year91.9%85.9%57.1%56.0%56.6%53.8%
3 Year112.3%95.2%146.1%138.6%64.4%53.6%
5 Year175.5%140.0%329.3%305.3%120.4%95.7%

Long-Term Price Volatility Vs. Market

How volatile is Magic Software Enterprises's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Magic Software Enterprises undervalued compared to its fair value and its price relative to the market?

17.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MGIC ($16.01) is trading below our estimate of fair value ($19.32)

Significantly Below Fair Value: MGIC is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: MGIC is good value based on its PE Ratio (32.9x) compared to the US Software industry average (54.5x).

PE vs Market: MGIC is poor value based on its PE Ratio (32.9x) compared to the US market (22.4x).


Price to Earnings Growth Ratio

PEG Ratio: MGIC is poor value based on its PEG Ratio (1.5x)


Price to Book Ratio

PB vs Industry: MGIC is good value based on its PB Ratio (3x) compared to the US Software industry average (8.7x).


Future Growth

How is Magic Software Enterprises forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

22.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MGIC's forecast earnings growth (22.5% per year) is above the savings rate (2%).

Earnings vs Market: MGIC's earnings (22.5% per year) are forecast to grow faster than the US market (17.9% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: MGIC's revenue (11.8% per year) is forecast to grow faster than the US market (9.3% per year).

High Growth Revenue: MGIC's revenue (11.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if MGIC's Return on Equity is forecast to be high in 3 years time


Past Performance

How has Magic Software Enterprises performed over the past 5 years?

4.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MGIC has high quality earnings.

Growing Profit Margin: MGIC's current net profit margins (6.4%) are higher than last year (3.9%).


Past Earnings Growth Analysis

Earnings Trend: MGIC's earnings have grown by 4.7% per year over the past 5 years.

Accelerating Growth: MGIC's earnings growth over the past year (86.5%) exceeds its 5-year average (4.7% per year).

Earnings vs Industry: MGIC earnings growth over the past year (86.5%) exceeded the Software industry 16.3%.


Return on Equity

High ROE: MGIC's Return on Equity (10.2%) is considered low.


Financial Health

How is Magic Software Enterprises's financial position?


Financial Position Analysis

Short Term Liabilities: MGIC's short term assets ($211.2M) exceed its short term liabilities ($84.8M).

Long Term Liabilities: MGIC's short term assets ($211.2M) exceed its long term liabilities ($64.5M).


Debt to Equity History and Analysis

Debt Level: MGIC's debt to equity ratio (8.5%) is considered satisfactory.

Reducing Debt: MGIC's debt to equity ratio has increased from 1.6% to 8.5% over the past 5 years.

Debt Coverage: MGIC's debt is well covered by operating cash flow (210.2%).

Interest Coverage: MGIC's interest payments on its debt are well covered by EBIT (45.4x coverage).


Balance Sheet


Dividend

What is Magic Software Enterprises's current dividend yield, its reliability and sustainability?

2.40%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: MGIC's dividend (2.4%) is higher than the bottom 25% of dividend payers in the US market (1.24%).

High Dividend: MGIC's dividend (2.4%) is low compared to the top 25% of dividend payers in the US market (3.46%).


Stability and Growth of Payments

Stable Dividend: MGIC has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: MGIC's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (79.1%), MGIC's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

8.6yrs

Average management tenure


CEO

Guy Bernstein (52 yo)

11yrs

Tenure

Mr. Guy Bernstein is the Chief Executive Officer of Magic Software Enterprises Ltd. since April 2010 and has been its Director since January 01, 2007. Mr. Bernstein served as a member of our board of direc...


Leadership Team

Experienced Management: MGIC's management team is seasoned and experienced (8.6 years average tenure).


Board Members

Experienced Board: MGIC's board of directors are considered experienced (6.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Magic Software Enterprises Ltd.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Magic Software Enterprises Ltd.
  • Ticker: MGIC
  • Exchange: NasdaqGS
  • Founded: 1983
  • Industry: Application Software
  • Sector: Software
  • Market Cap: US$828.266m
  • Shares outstanding: 49.04m
  • Website: https://www.magicsoftware.com

Number of Employees


Location

  • Magic Software Enterprises Ltd.
  • 5 Haplada Street
  • PO Box 5011
  • Or Yehuda
  • 60218 05
  • Israel

Listings


Biography

Magic Software Enterprises Ltd. provides proprietary application development, business process integration, vertical software solutions, and information technologies (IT) outsourcing software services in I...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/04/18 23:04
End of Day Share Price2021/04/16 00:00
Earnings2020/12/31
Annual Earnings2020/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.