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MAGIC SOFTWARE ENTERPRISES (MGIC) Stock Fundamental Analysis

NASDAQ:MGIC - Nasdaq - IL0010823123 - Common Stock - Currency: USD

16.15  +0.31 (+1.99%)

After market: 16.15 0 (0%)

Fundamental Rating

5

MGIC gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 283 industry peers in the Software industry. MGIC has only an average score on both its financial health and profitability. MGIC is valued correctly, but it does not seem to be growing. MGIC also has an excellent dividend rating.


Dividend Valuation Growth Profitability Health

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5

1. Profitability

1.1 Basic Checks

MGIC had positive earnings in the past year.
MGIC had a positive operating cash flow in the past year.
MGIC had positive earnings in 4 of the past 5 years.
Of the past 5 years MGIC 4 years had a positive operating cash flow.
MGIC Yearly Net Income VS EBIT VS OCF VS FCFMGIC Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 20M 40M 60M

1.2 Ratios

Looking at the Return On Assets, with a value of 6.34%, MGIC is in the better half of the industry, outperforming 78.09% of the companies in the same industry.
Looking at the Return On Equity, with a value of 12.42%, MGIC is in the better half of the industry, outperforming 79.86% of the companies in the same industry.
With an excellent Return On Invested Capital value of 12.21%, MGIC belongs to the best of the industry, outperforming 88.34% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for MGIC is in line with the industry average of 12.42%.
Industry RankSector Rank
ROA 6.34%
ROE 12.42%
ROIC 12.21%
ROA(3y)7.07%
ROA(5y)6.37%
ROE(3y)13.52%
ROE(5y)11.69%
ROIC(3y)12.64%
ROIC(5y)10.97%
MGIC Yearly ROA, ROE, ROICMGIC Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 5 10 15

1.3 Margins

MGIC has a Profit Margin of 6.40%. This is in the better half of the industry: MGIC outperforms 72.08% of its industry peers.
MGIC's Profit Margin has been stable in the last couple of years.
MGIC has a Operating Margin of 10.68%. This is in the better half of the industry: MGIC outperforms 77.74% of its industry peers.
In the last couple of years the Operating Margin of MGIC has remained more or less at the same level.
With a Gross Margin value of 28.60%, MGIC is not doing good in the industry: 78.45% of the companies in the same industry are doing better.
In the last couple of years the Gross Margin of MGIC has declined.
Industry RankSector Rank
OM 10.68%
PM (TTM) 6.4%
GM 28.6%
OM growth 3Y-1.69%
OM growth 5Y-0.86%
PM growth 3Y0.65%
PM growth 5Y-0.22%
GM growth 3Y-1.06%
GM growth 5Y-1.74%
MGIC Yearly Profit, Operating, Gross MarginsMGIC Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 10 20 30

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4

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.
There is no outstanding debt for MGIC. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
MGIC Yearly Shares OutstandingMGIC Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 10M 20M 30M 40M
MGIC Yearly Total Debt VS Total AssetsMGIC Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 100M 200M 300M 400M 500M

2.2 Solvency

MGIC has a debt to FCF ratio of 1.46. This is a very positive value and a sign of high solvency as it would only need 1.46 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.46, MGIC is doing good in the industry, outperforming 70.67% of the companies in the same industry.
A Debt/Equity ratio of 0.23 indicates that MGIC is not too dependend on debt financing.
MGIC has a Debt to Equity ratio (0.23) which is in line with its industry peers.
Industry RankSector Rank
Debt/Equity 0.23
Debt/FCF 1.46
Altman-Z N/A
ROIC/WACC1.38
WACC8.82%
MGIC Yearly LT Debt VS Equity VS FCFMGIC Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 50M 100M 150M 200M 250M

2.3 Liquidity

MGIC has a Current Ratio of 1.66. This is a normal value and indicates that MGIC is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of MGIC (1.66) is comparable to the rest of the industry.
MGIC has a Quick Ratio of 1.66. 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 1.66 is in line compared to the rest of the industry. MGIC outperforms 51.59% of its industry peers.
Industry RankSector Rank
Current Ratio 1.66
Quick Ratio 1.66
MGIC Yearly Current Assets VS Current LiabilitesMGIC Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 50M 100M 150M 200M 250M

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3

3. Growth

3.1 Past

The earnings per share for MGIC have decreased by -5.05% in the last year.
The Earnings Per Share has been growing by 10.14% on average over the past years. This is quite good.
EPS 1Y (TTM)-5.05%
EPS 3Y0%
EPS 5Y10.14%
EPS Q2Q%0%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%13.57%

3.2 Future

MGIC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.57% yearly.
Based on estimates for the next years, MGIC will show a small growth in Revenue. The Revenue will grow by 7.16% on average per year.
EPS Next Y10.03%
EPS Next 2Y8.76%
EPS Next 3Y11.57%
EPS Next 5YN/A
Revenue Next Year6.48%
Revenue Next 2Y5.68%
Revenue Next 3Y7.16%
Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
MGIC Yearly Revenue VS EstimatesMGIC Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 200M 400M 600M
MGIC Yearly EPS VS EstimatesMGIC Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 0.2 0.4 0.6 0.8 1

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6

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 17.18, the valuation of MGIC can be described as rather expensive.
Based on the Price/Earnings ratio, MGIC is valued cheaper than 83.04% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.68, MGIC is valued a bit cheaper.
The Price/Forward Earnings ratio is 15.61, which indicates a correct valuation of MGIC.
Based on the Price/Forward Earnings ratio, MGIC is valued cheaply inside the industry as 83.04% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.50, MGIC is valued a bit cheaper.
Industry RankSector Rank
PE 17.18
Fwd PE 15.61
MGIC Price Earnings VS Forward Price EarningsMGIC Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30 40 50

4.2 Price Multiples

MGIC's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MGIC is cheaper than 91.52% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MGIC indicates a rather cheap valuation: MGIC is cheaper than 92.23% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 12.61
EV/EBITDA 9.94
MGIC Per share dataMGIC EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6 8 10

4.3 Compensation for Growth

MGIC's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
PEG (NY)1.71
PEG (5Y)1.69
EPS Next 2Y8.76%
EPS Next 3Y11.57%

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7

5. Dividend

5.1 Amount

MGIC has a Yearly Dividend Yield of 4.16%, which is a nice return.
Compared to an average industry Dividend Yield of 14.23, MGIC pays a better dividend. On top of this MGIC pays more dividend than 98.23% of the companies listed in the same industry.
MGIC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.36.
Industry RankSector Rank
Dividend Yield 4.16%

5.2 History

On average, the dividend of MGIC grows each year by 16.69%, which is quite nice.
MGIC has been paying a dividend for at least 10 years, so it has a reliable track record.
MGIC has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)16.69%
Div Incr Years3
Div Non Decr Years3
MGIC Yearly Dividends per shareMGIC Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.2 0.4 0.6

5.3 Sustainability

MGIC pays out 48.06% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of MGIC is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP48.06%
EPS Next 2Y8.76%
EPS Next 3Y11.57%
MGIC Yearly Income VS Free CF VS DividendMGIC Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 20M 40M 60M
MGIC Dividend Payout.MGIC Dividend Payout, showing the Payout Ratio.MGIC Dividend Payout.PayoutRetained Earnings

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MAGIC SOFTWARE ENTERPRISES

NASDAQ:MGIC (5/19/2025, 4:30:01 PM)

After market: 16.15 0 (0%)

16.15

+0.31 (+1.99%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)05-07 2025-05-07/bmo
Earnings (Next)08-12 2025-08-12/bmo
Inst Owners26.9%
Inst Owner Change39.18%
Ins Owners0.39%
Ins Owner ChangeN/A
Market Cap792.96M
Analysts80
Price Target16.32 (1.05%)
Short Float %0.65%
Short Ratio2.12
Dividend
Industry RankSector Rank
Dividend Yield 4.16%
Yearly Dividend0.63
Dividend Growth(5Y)16.69%
DP48.06%
Div Incr Years3
Div Non Decr Years3
Ex-Date04-22 2025-04-22 (0.327)
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)3.09%
Min EPS beat(2)-1.96%
Max EPS beat(2)8.15%
EPS beat(4)2
Avg EPS beat(4)2.41%
Min EPS beat(4)-20.05%
Max EPS beat(4)23.51%
EPS beat(8)5
Avg EPS beat(8)3.1%
EPS beat(12)8
Avg EPS beat(12)2.49%
EPS beat(16)12
Avg EPS beat(16)4%
Revenue beat(2)2
Avg Revenue beat(2)0.38%
Min Revenue beat(2)0.09%
Max Revenue beat(2)0.67%
Revenue beat(4)3
Avg Revenue beat(4)-0.27%
Min Revenue beat(4)-6.59%
Max Revenue beat(4)4.75%
Revenue beat(8)5
Avg Revenue beat(8)-0.22%
Revenue beat(12)9
Avg Revenue beat(12)1.43%
Revenue beat(16)13
Avg Revenue beat(16)2.89%
PT rev (1m)0%
PT rev (3m)6.67%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0%
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0%
Valuation
Industry RankSector Rank
PE 17.18
Fwd PE 15.61
P/S 1.52
P/FCF 12.61
P/OCF 11.71
P/B 2.95
P/tB 15.51
EV/EBITDA 9.94
EPS(TTM)0.94
EY5.82%
EPS(NY)1.03
Fwd EY6.4%
FCF(TTM)1.28
FCFY7.93%
OCF(TTM)1.38
OCFY8.54%
SpS10.63
BVpS5.48
TBVpS1.04
PEG (NY)1.71
PEG (5Y)1.69
Profitability
Industry RankSector Rank
ROA 6.34%
ROE 12.42%
ROCE 15.1%
ROIC 12.21%
ROICexc 17.28%
ROICexgc 104.74%
OM 10.68%
PM (TTM) 6.4%
GM 28.6%
FCFM 12.05%
ROA(3y)7.07%
ROA(5y)6.37%
ROE(3y)13.52%
ROE(5y)11.69%
ROIC(3y)12.64%
ROIC(5y)10.97%
ROICexc(3y)17.11%
ROICexc(5y)14.82%
ROICexgc(3y)76.97%
ROICexgc(5y)60.02%
ROCE(3y)15.77%
ROCE(5y)13.76%
ROICexcg growth 3Y29.57%
ROICexcg growth 5Y15.22%
ROICexc growth 3Y12.07%
ROICexc growth 5Y5.85%
OM growth 3Y-1.69%
OM growth 5Y-0.86%
PM growth 3Y0.65%
PM growth 5Y-0.22%
GM growth 3Y-1.06%
GM growth 5Y-1.74%
F-Score5
Asset Turnover0.99
Health
Industry RankSector Rank
Debt/Equity 0.23
Debt/FCF 1.46
Debt/EBITDA 0.8
Cap/Depr 23.35%
Cap/Sales 0.93%
Interest Coverage 250
Cash Conversion 88.55%
Profit Quality 188.22%
Current Ratio 1.66
Quick Ratio 1.66
Altman-Z N/A
F-Score5
WACC8.82%
ROIC/WACC1.38
Cap/Depr(3y)28.46%
Cap/Depr(5y)33.65%
Cap/Sales(3y)1.07%
Cap/Sales(5y)1.31%
Profit Quality(3y)141.75%
Profit Quality(5y)161.57%
High Growth Momentum
Growth
EPS 1Y (TTM)-5.05%
EPS 3Y0%
EPS 5Y10.14%
EPS Q2Q%0%
EPS Next Y10.03%
EPS Next 2Y8.76%
EPS Next 3Y11.57%
EPS Next 5YN/A
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%13.57%
Revenue Next Year6.48%
Revenue Next 2Y5.68%
Revenue Next 3Y7.16%
Revenue Next 5YN/A
EBIT growth 1Y-9.2%
EBIT growth 3Y11.05%
EBIT growth 5Y12.49%
EBIT Next Year15.94%
EBIT Next 3Y9.26%
EBIT Next 5Y9.17%
FCF growth 1Y127.53%
FCF growth 3Y11.56%
FCF growth 5Y26.88%
OCF growth 1Y99.27%
OCF growth 3Y9.67%
OCF growth 5Y23.46%