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MGIC

Magic Software Enterprises NasdaqGS:MGIC Stock Report

Last Price

US$18.10

Market Cap

US$888.6m

7D

8.1%

1Y

12.0%

Updated

27 Jun, 2022

Data

Company Financials +
MGIC fundamental analysis
Snowflake Score
Valuation2/6
Future Growth4/6
Past Performance2/6
Financial Health5/6
Dividends4/6

MGIC Stock Overview

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.

Magic Software Enterprises Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Magic Software Enterprises
Historical stock prices
Current Share PriceUS$18.10
52 Week HighUS$25.49
52 Week LowUS$15.08
Beta1.27
1 Month Change4.08%
3 Month Change0.11%
1 Year Change12.01%
3 Year Change98.90%
5 Year Change127.67%
Change since IPO568.31%

Recent News & Updates

May 15

Magic Software Continues To Create Revenue Platforms In Resilient Industries

Magic Software has about 80% of its revenue coming from long-term engagements with current clients. Growth is being driven by the signing of contracts with new clients primarily in healthcare and defense. These resilient industries are creating an attractive revenue platform for the company, and the cash generation drivers continue to fire. The company continues to be a nice mid-cap tech exposure, but it's beginning to trade too dearly for us high conviction investors to be interested.

Shareholder Returns

MGICUS SoftwareUS Market
7D8.1%8.1%6.3%
1Y12.0%-20.3%-18.8%

Return vs Industry: MGIC exceeded the US Software industry which returned -17.9% over the past year.

Return vs Market: MGIC exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is MGIC's price volatile compared to industry and market?
MGIC volatility
MGIC Average Weekly Movement5.0%
Software Industry Average Movement11.1%
Market Average Movement8.1%
10% most volatile stocks in US Market16.7%
10% least volatile stocks in US Market3.2%

Stable Share Price: MGIC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: MGIC's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19833,677Guy Bernsteinhttps://www.magicsoftware.com

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. The company’s Software Services segment develops, markets, sells, and supports application platform, software applications, and business and process integration solutions and related services. Its IT Professional Services segment offers IT services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, and supplemental outsourcing services.

Magic Software Enterprises Fundamentals Summary

How do Magic Software Enterprises's earnings and revenue compare to its market cap?
MGIC fundamental statistics
Market CapUS$888.58m
Earnings (TTM)US$27.38m
Revenue (TTM)US$511.73m

32.5x

P/E Ratio

1.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MGIC income statement (TTM)
RevenueUS$511.73m
Cost of RevenueUS$371.35m
Gross ProfitUS$140.38m
Other ExpensesUS$113.00m
EarningsUS$27.38m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)0.56
Gross Margin27.43%
Net Profit Margin5.35%
Debt/Equity Ratio19.9%

How did MGIC perform over the long term?

See historical performance and comparison

Dividends

2.5%

Current Dividend Yield

81%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is MGIC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MGIC?

Other financial metrics that can be useful for relative valuation.

MGIC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1.8x
Enterprise Value/EBITDA12.3x
PEG Ratio1x

Price to Earnings Ratio vs Peers

How does MGIC's PE Ratio compare to its peers?

MGIC PE Ratio vs Peers
The above table shows the PE ratio for MGIC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average27.9x
CRNC Cerence
34.1x26.5%US$1.1b
KARO Karooooo
23.1x20.9%US$655.4m
MTLS Materialise
45.7x31.4%US$820.4m
CCSI Consensus Cloud Solutions
8.6x14.4%US$865.3m
MGIC Magic Software Enterprises
32.5x31.4%US$888.6m

Price-To-Earnings vs Peers: MGIC is expensive based on its Price-To-Earnings Ratio (32.5x) compared to the peer average (27.9x).


Price to Earnings Ratio vs Industry

How does MGIC's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Earnings vs Industry: MGIC is good value based on its Price-To-Earnings Ratio (32.5x) compared to the US Software industry average (39.3x)


Price to Earnings Ratio vs Fair Ratio

What is MGIC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MGIC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio32.5x
Fair PE Ratio33.5x

Price-To-Earnings vs Fair Ratio: MGIC is good value based on its Price-To-Earnings Ratio (32.5x) compared to the estimated Fair Price-To-Earnings Ratio (33.5x).


Share Price vs Fair Value

What is the Fair Price of MGIC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MGIC ($18.1) is trading above our estimate of fair value ($8.67)

Significantly Below Fair Value: MGIC is trading above our estimate of fair value.


Price to Earnings Growth Ratio

PEG Ratio: MGIC is poor value based on its PEG Ratio (1x)


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Future Growth

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

Future Growth Score

4/6

Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


31.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MGIC's forecast earnings growth (31.4% per year) is above the savings rate (1.9%).

Earnings vs Market: MGIC's earnings (31.4% per year) are forecast to grow faster than the US market (13.9% per year).

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

Revenue vs Market: MGIC's revenue (9% per year) is forecast to grow faster than the US market (8.4% per year).

High Growth Revenue: MGIC's revenue (9% 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


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Past Performance

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

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


14.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MGIC has high quality earnings.

Growing Profit Margin: MGIC's current net profit margins (5.4%) are lower than last year (6.5%).


Past Earnings Growth Analysis

Earnings Trend: MGIC's earnings have grown by 14.9% per year over the past 5 years.

Accelerating Growth: MGIC's earnings growth over the past year (7.1%) is below its 5-year average (14.9% per year).

Earnings vs Industry: MGIC earnings growth over the past year (7.1%) underperformed the Software industry 27.1%.


Return on Equity

High ROE: MGIC's Return on Equity (12.3%) is considered low.


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Financial Health

How is Magic Software Enterprises's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: MGIC's short term assets ($274.0M) exceed its short term liabilities ($139.0M).

Long Term Liabilities: MGIC's short term assets ($274.0M) exceed its long term liabilities ($100.3M).


Debt to Equity History and Analysis

Debt Level: MGIC has more cash than its total debt.

Reducing Debt: MGIC's debt to equity ratio has increased from 18.9% to 19.9% over the past 5 years.

Debt Coverage: MGIC's debt is well covered by operating cash flow (55.2%).

Interest Coverage: MGIC earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet


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Dividend

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

Dividend Score

3/6

Dividend Score 3/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Future Dividend Coverage


2.49%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MGIC's dividend (2.49%) is higher than the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: MGIC's dividend (2.49%) is low compared to the top 25% of dividend payers in the US market (4.23%).


Stability and Growth of Payments

Stable Dividend: MGIC's dividend payments have been volatile in the past 10 years.

Growing Dividend: MGIC's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (80.6%), MGIC's payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (77.7%), MGIC's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

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

8.6yrs

Average management tenure


CEO

Guy Bernstein (53 yo)

12.17yrs

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 (7.5 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 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
  • Implied Market Cap: US$888.584m
  • Shares outstanding: 49.09m
  • Website: https://www.magicsoftware.com

Number of Employees


Location

  • Magic Software Enterprises Ltd.
  • Terminal Center
  • Yahadut Canada 1 Street
  • Or Yehuda
  • 6037501
  • Israel

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/06/27 00:00
End of Day Share Price2022/06/27 00:00
Earnings2022/03/31
Annual Earnings2021/12/31


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.