MAGIC SOFTWARE ENTERPRISES (MGIC) Stock Fundamental Analysis
NASDAQ:MGIC - Nasdaq - IL0010823123 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to MGIC. MGIC was compared to 282 industry peers in the Software industry. While MGIC belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. MGIC has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
In the past year MGIC was profitable.
In the past year MGIC had a positive cash flow from operations.
MGIC had positive earnings in each of the past 5 years.
Each year in the past 5 years MGIC had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 7.10%, MGIC is in the better half of the industry, outperforming 79.08% of the companies in the same industry.
With an excellent Return On Equity value of 14.10%, MGIC belongs to the best of the industry, outperforming 81.91% of the companies in the same industry.
With an excellent Return On Invested Capital value of 14.28%, MGIC belongs to the best of the industry, outperforming 91.84% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for MGIC is in line with the industry average of 12.17%.
The last Return On Invested Capital (14.28%) for MGIC is above the 3 year average (13.11%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.1% | ||
| ROE | 14.1% | ||
| ROIC | 14.28% |
ROA(3y)7.32%
ROA(5y)6.74%
ROE(3y)14.22%
ROE(5y)12.72%
ROIC(3y)13.11%
ROIC(5y)11.98%
1.3 Margins
With a decent Profit Margin value of 6.66%, MGIC is doing good in the industry, outperforming 74.11% of the companies in the same industry.
In the last couple of years the Profit Margin of MGIC has remained more or less at the same level.
Looking at the Operating Margin, with a value of 11.07%, MGIC is in the better half of the industry, outperforming 77.66% of the companies in the same industry.
MGIC's Operating Margin has been stable in the last couple of years.
With a Gross Margin value of 28.43%, MGIC is not doing good in the industry: 79.43% of the companies in the same industry are doing better.
In the last couple of years the Gross Margin of MGIC has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.07% | ||
| PM (TTM) | 6.66% | ||
| GM | 28.43% |
OM growth 3Y0.56%
OM growth 5Y1.28%
PM growth 3Y2.55%
PM growth 5Y1.42%
GM growth 3Y1.05%
GM growth 5Y-1.84%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), MGIC is creating some value.
Compared to 1 year ago, MGIC has about the same amount of shares outstanding.
The number of shares outstanding for MGIC has been increased compared to 5 years ago.
Compared to 1 year ago, MGIC has an improved debt to assets ratio.
2.2 Solvency
MGIC has a debt to FCF ratio of 1.42. This is a very positive value and a sign of high solvency as it would only need 1.42 years to pay back of all of its debts.
MGIC's Debt to FCF ratio of 1.42 is fine compared to the rest of the industry. MGIC outperforms 71.63% of its industry peers.
A Debt/Equity ratio of 0.20 indicates that MGIC is not too dependend on debt financing.
MGIC has a Debt to Equity ratio (0.20) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.2 | ||
| Debt/FCF | 1.42 | ||
| Altman-Z | N/A |
ROIC/WACC1.47
WACC9.68%
2.3 Liquidity
A Current Ratio of 1.51 indicates that MGIC should not have too much problems paying its short term obligations.
MGIC has a Current ratio of 1.51. This is comparable to the rest of the industry: MGIC outperforms 48.58% of its industry peers.
MGIC has a Quick Ratio of 1.51. This is a normal value and indicates that MGIC is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.51, MGIC is in line with its industry, outperforming 48.94% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.51 | ||
| Quick Ratio | 1.51 |
3. Growth
3.1 Past
The earnings per share for MGIC have decreased by 0.00% in the last year.
MGIC shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.14% yearly.
MGIC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.77%.
Measured over the past years, MGIC shows a quite strong growth in Revenue. The Revenue has been growing by 11.18% on average per year.
EPS 1Y (TTM)0%
EPS 3Y0%
EPS 5Y10.14%
EPS Q2Q%8.7%
Revenue 1Y (TTM)8.77%
Revenue growth 3Y4.81%
Revenue growth 5Y11.18%
Sales Q2Q%12.71%
3.2 Future
Based on estimates for the next years, MGIC will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.10% on average per year.
MGIC is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.17% yearly.
EPS Next Y8.51%
EPS Next 2Y9.05%
EPS Next 3Y10.1%
EPS Next 5YN/A
Revenue Next Year9.44%
Revenue Next 2Y7.71%
Revenue Next 3Y7.17%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
MGIC is valuated rather expensively with a Price/Earnings ratio of 22.01.
Compared to the rest of the industry, the Price/Earnings ratio of MGIC indicates a somewhat cheap valuation: MGIC is cheaper than 78.37% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.50, MGIC is valued at the same level.
A Price/Forward Earnings ratio of 18.90 indicates a rather expensive valuation of MGIC.
MGIC's Price/Forward Earnings ratio is rather cheap when compared to the industry. MGIC is cheaper than 80.85% of the companies in the same industry.
MGIC is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 36.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.01 | ||
| Fwd PE | 18.9 |
4.2 Price Multiples
88.65% of the companies in the same industry are more expensive than MGIC, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, MGIC is valued cheaply inside the industry as 85.82% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.94 | ||
| EV/EBITDA | 13.19 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
MGIC has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.59
PEG (5Y)2.17
EPS Next 2Y9.05%
EPS Next 3Y10.1%
5. Dividend
5.1 Amount
MGIC has a Yearly Dividend Yield of 3.03%. Purely for dividend investing, there may be better candidates out there.
MGIC's Dividend Yield is rather good when compared to the industry average which is at 24.07. MGIC pays more dividend than 97.87% of the companies in the same industry.
MGIC's Dividend Yield is a higher than the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.03% |
5.2 History
The dividend of MGIC decreases each year by -7.77%.
MGIC has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-7.77%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
57.99% of the earnings are spent on dividend by MGIC. This is a bit on the high side, but may be sustainable.
DP57.99%
EPS Next 2Y9.05%
EPS Next 3Y10.1%
NASDAQ:MGIC (7/18/2025, 8:00:01 PM)
21.13
+0.13 (+0.6%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners27.16%
Inst Owner Change0%
Ins Owners0.39%
Ins Owner ChangeN/A
Market Cap1.04B
Analysts80
Price Target16.32 (-22.76%)
Short Float %1.24%
Short Ratio4.48
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.03% |
Yearly Dividend0.2
Dividend Growth(5Y)-7.77%
DP57.99%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-4.38%
Min EPS beat(2)-5%
Max EPS beat(2)-3.77%
EPS beat(4)0
Avg EPS beat(4)-4.72%
Min EPS beat(4)-8.15%
Max EPS beat(4)-1.96%
EPS beat(8)3
Avg EPS beat(8)-0.46%
EPS beat(12)5
Avg EPS beat(12)-0.28%
EPS beat(16)9
Avg EPS beat(16)1.38%
Revenue beat(2)2
Avg Revenue beat(2)1.1%
Min Revenue beat(2)0.24%
Max Revenue beat(2)1.96%
Revenue beat(4)4
Avg Revenue beat(4)1.15%
Min Revenue beat(4)0.24%
Max Revenue beat(4)1.96%
Revenue beat(8)6
Avg Revenue beat(8)-0.24%
Revenue beat(12)9
Avg Revenue beat(12)0.26%
Revenue beat(16)13
Avg Revenue beat(16)2.06%
PT rev (1m)0%
PT rev (3m)0%
EPS NQ rev (1m)1.84%
EPS NQ rev (3m)0.2%
EPS NY rev (1m)-1.38%
EPS NY rev (3m)-1.38%
Revenue NQ rev (1m)0.98%
Revenue NQ rev (3m)0.43%
Revenue NY rev (1m)2.78%
Revenue NY rev (3m)2.78%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.01 | ||
| Fwd PE | 18.9 | ||
| P/S | 1.82 | ||
| P/FCF | 17.94 | ||
| P/OCF | 16.73 | ||
| P/B | 3.86 | ||
| P/tB | 20.34 | ||
| EV/EBITDA | 13.19 |
EPS(TTM)0.96
EY4.54%
EPS(NY)1.12
Fwd EY5.29%
FCF(TTM)1.18
FCFY5.57%
OCF(TTM)1.26
OCFY5.98%
SpS11.59
BVpS5.48
TBVpS1.04
PEG (NY)2.59
PEG (5Y)2.17
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.1% | ||
| ROE | 14.1% | ||
| ROCE | 17.75% | ||
| ROIC | 14.28% | ||
| ROICexc | 14.28% | ||
| ROICexgc | 37% | ||
| OM | 11.07% | ||
| PM (TTM) | 6.66% | ||
| GM | 28.43% | ||
| FCFM | 10.16% |
ROA(3y)7.32%
ROA(5y)6.74%
ROE(3y)14.22%
ROE(5y)12.72%
ROIC(3y)13.11%
ROIC(5y)11.98%
ROICexc(3y)16.21%
ROICexc(5y)15.22%
ROICexgc(3y)67.44%
ROICexgc(5y)59.59%
ROCE(3y)16.4%
ROCE(5y)15.06%
ROICexcg growth 3Y-19.18%
ROICexcg growth 5Y-1.06%
ROICexc growth 3Y-5.55%
ROICexc growth 5Y3.96%
OM growth 3Y0.56%
OM growth 5Y1.28%
PM growth 3Y2.55%
PM growth 5Y1.42%
GM growth 3Y1.05%
GM growth 5Y-1.84%
F-Score6
Asset Turnover1.07
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.2 | ||
| Debt/FCF | 1.42 | ||
| Debt/EBITDA | 0.63 | ||
| Cap/Depr | 19.54% | ||
| Cap/Sales | 0.73% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 73.47% | ||
| Profit Quality | 152.4% | ||
| Current Ratio | 1.51 | ||
| Quick Ratio | 1.51 | ||
| Altman-Z | N/A |
F-Score6
WACC9.68%
ROIC/WACC1.47
Cap/Depr(3y)27.17%
Cap/Depr(5y)29.68%
Cap/Sales(3y)1%
Cap/Sales(5y)1.12%
Profit Quality(3y)161.93%
Profit Quality(5y)160.05%
High Growth Momentum
Growth
EPS 1Y (TTM)0%
EPS 3Y0%
EPS 5Y10.14%
EPS Q2Q%8.7%
EPS Next Y8.51%
EPS Next 2Y9.05%
EPS Next 3Y10.1%
EPS Next 5YN/A
Revenue 1Y (TTM)8.77%
Revenue growth 3Y4.81%
Revenue growth 5Y11.18%
Sales Q2Q%12.71%
Revenue Next Year9.44%
Revenue Next 2Y7.71%
Revenue Next 3Y7.17%
Revenue Next 5YN/A
EBIT growth 1Y13.14%
EBIT growth 3Y5.4%
EBIT growth 5Y12.6%
EBIT Next Year11.26%
EBIT Next 3Y8.83%
EBIT Next 5YN/A
FCF growth 1Y4.82%
FCF growth 3Y21.95%
FCF growth 5Y11.86%
OCF growth 1Y-0.96%
OCF growth 3Y19.75%
OCF growth 5Y10.29%