27.26 USD
+0.29 (+1.08%)
MGIC gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. MGIC scores excellent on profitability, but 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
- MGIC had positive earnings in the past year.
- In the past year MGIC had a positive cash flow from operations.
- In the past 5 years MGIC has always been profitable.
- Each year in the past 5 years MGIC had a positive operating cash flow.
1.2 Ratios
- The Return On Assets of MGIC (7.16%) is better than 76.98% of its industry peers.
- MGIC has a Return On Equity of 13.92%. This is amongst the best in the industry. MGIC outperforms 80.22% of its industry peers.
- The Return On Invested Capital of MGIC (13.66%) is better than 91.01% of its industry peers.
- MGIC had an Average Return On Invested Capital over the past 3 years of 13.11%. This is above the industry average of 10.76%.
- The last Return On Invested Capital (13.66%) for MGIC is above the 3 year average (13.11%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.16% | ||
| ROE | 13.92% | ||
| ROIC | 13.66% |
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
- MGIC has a Profit Margin of 6.64%. This is in the better half of the industry: MGIC outperforms 65.83% of its industry peers.
- In the last couple of years the Profit Margin of MGIC has remained more or less at the same level.
- The Operating Margin of MGIC (10.94%) is better than 76.62% of its industry peers.
- In the last couple of years the Operating Margin of MGIC has remained more or less at the same level.
- MGIC has a worse Gross Margin (28.38%) than 79.50% of its industry peers.
- MGIC's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.94% | ||
| PM (TTM) | 6.64% | ||
| GM | 28.38% |
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
- MGIC has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
- MGIC has about the same amout of shares outstanding than it did 1 year ago.
- 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
- The Debt to FCF ratio of MGIC is 1.92, which is an excellent value as it means it would take MGIC, only 1.92 years of fcf income to pay off all of its debts.
- MGIC has a Debt to FCF ratio of 1.92. This is in the better half of the industry: MGIC outperforms 68.35% of its industry peers.
- A Debt/Equity ratio of 0.23 indicates that MGIC is not too dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.23, MGIC is in line with its industry, outperforming 43.53% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.92 | ||
| Altman-Z | N/A |
ROIC/WACC1.51
WACC9.07%
2.3 Liquidity
- A Current Ratio of 1.61 indicates that MGIC should not have too much problems paying its short term obligations.
- MGIC has a Current ratio (1.61) which is in line with its industry peers.
- MGIC has a Quick Ratio of 1.61. This is a normal value and indicates that MGIC is financially healthy and should not expect problems in meeting its short term obligations.
- MGIC's Quick ratio of 1.61 is in line compared to the rest of the industry. MGIC outperforms 50.72% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.61 | ||
| Quick Ratio | 1.61 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 6.38% over the past 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 a small growth in Revenue. In the last year, the Revenue has grown by 3.35%.
- MGIC shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 11.18% yearly.
EPS 1Y (TTM)6.38%
EPS 3Y0%
EPS 5Y10.14%
EPS Q2Q%8.7%
Revenue 1Y (TTM)3.35%
Revenue growth 3Y4.81%
Revenue growth 5Y11.18%
Sales Q2Q%13.07%
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 7.56% yearly.
EPS Next Y11.77%
EPS Next 2Y10.63%
EPS Next 3Y10.1%
EPS Next 5YN/A
Revenue Next Year11.76%
Revenue Next 2Y8.96%
Revenue Next 3Y7.56%
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
- A Price/Earnings ratio of 27.26 indicates a quite expensive valuation of MGIC.
- Based on the Price/Earnings ratio, MGIC is valued a bit cheaper than 65.11% of the companies in the same industry.
- When comparing the Price/Earnings ratio of MGIC to the average of the S&P500 Index (27.25), we can say MGIC is valued inline with the index average.
- MGIC is valuated rather expensively with a Price/Forward Earnings ratio of 23.69.
- 66.19% of the companies in the same industry are more expensive than MGIC, based on the Price/Forward Earnings ratio.
- When comparing the Price/Forward Earnings ratio of MGIC to the average of the S&P500 Index (25.98), we can say MGIC is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.26 | ||
| Fwd PE | 23.69 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MGIC indicates a rather cheap valuation: MGIC is cheaper than 81.65% of the companies listed in the same industry.
- Based on the Price/Free Cash Flow ratio, MGIC is valued a bit cheaper than 71.94% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.19 | ||
| EV/EBITDA | 16.54 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates MGIC does not grow enough to justify the current Price/Earnings ratio.
- The decent profitability rating of MGIC may justify a higher PE ratio.
PEG (NY)2.32
PEG (5Y)2.69
EPS Next 2Y10.63%
EPS Next 3Y10.1%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 1.13%, MGIC has a reasonable but not impressive dividend return.
- MGIC's Dividend Yield is rather good when compared to the industry average which is at 0.54. MGIC pays more dividend than 92.81% of the companies in the same industry.
- MGIC's Dividend Yield is slightly below the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.13% |
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
- 97.86% of the earnings are spent on dividend by MGIC. This is not a sustainable payout ratio.
DP97.86%
EPS Next 2Y10.63%
EPS Next 3Y10.1%
MAGIC SOFTWARE ENTERPRISES / MGIC FAQ
Can you provide the ChartMill fundamental rating for MAGIC SOFTWARE ENTERPRISES?
ChartMill assigns a fundamental rating of 5 / 10 to MGIC.
Can you provide the valuation status for MAGIC SOFTWARE ENTERPRISES?
ChartMill assigns a valuation rating of 4 / 10 to MAGIC SOFTWARE ENTERPRISES (MGIC). This can be considered as Fairly Valued.
What is the profitability of MGIC stock?
MAGIC SOFTWARE ENTERPRISES (MGIC) has a profitability rating of 7 / 10.
What is the expected EPS growth for MAGIC SOFTWARE ENTERPRISES (MGIC) stock?
The Earnings per Share (EPS) of MAGIC SOFTWARE ENTERPRISES (MGIC) is expected to grow by 11.77% in the next year.
Is the dividend of MAGIC SOFTWARE ENTERPRISES sustainable?
The dividend rating of MAGIC SOFTWARE ENTERPRISES (MGIC) is 3 / 10 and the dividend payout ratio is 97.86%.