Formula Systems (1985) Ltd (FORTY, Financial) has experienced a notable fluctuation in its stock price recently. With a current market capitalization of $1.29 billion, the company's shares are trading at $83.03. Over the past week, the stock has seen a decline of 5.30%, yet this short-term loss is overshadowed by a significant gain of 20.89% over the past three months. According to GF Value, the stock is currently modestly undervalued at a GF Value of $101.48, an increase from the past GF Value of $95.8, which previously indicated the stock was significantly undervalued.
Introduction to Formula Systems
Formula Systems (1985) Ltd operates within the software industry as a holding company. Through its subsidiaries, it offers a range of IT services, with a focus on software development and expansion. The company's primary revenue comes from the Israeli market, and it is structured into segments that cater to various sectors, including insurance and workforce management.
Assessing Profitability
Formula Systems boasts a strong Profitability Rank of 9/10, indicating a robust financial position within its industry. The company's operating margin stands at 9.07%, outperforming 68.39% of its peers. Additionally, the return on equity (ROE) is at 11.27%, the return on assets (ROA) at 2.33%, and the return on invested capital (ROIC) at 8.98%, each surpassing industry averages. Notably, Formula Systems has maintained profitability for the past ten years, a testament to its consistent performance. 
Growth Trajectory
The company's Growth Rank is an impressive 8/10. Formula Systems has demonstrated solid growth, with a 3-Year Revenue Growth Rate per Share of 14.40% and a 5-Year Revenue Growth Rate per Share of 13.90%, both outpacing the majority of competitors. The 3-Year EPS without NRI Growth Rate is 6.50%, and the 5-Year EPS without NRI Growth Rate is a remarkable 28.70%, indicating strong earnings growth. 
Competitive Landscape
When compared to its closest competitors, Formula Systems holds its ground with a market cap of $1.29 billion. Hilan Ltd (XTAE:HLAN, Financial) has a slightly higher market cap of $1.37 billion, while Nayax Ltd (XTAE:NYAX, Financial) and Magic Software Enterprises Ltd (XTAE:MGIC, Financial) have market caps of $936.084 million and $575.783 million, respectively. This positioning reflects Formula Systems' competitive strength and market presence within the software industry.
Conclusion
In summary, Formula Systems (1985) Ltd has demonstrated a robust stock performance, particularly over the past three months. The company's profitability metrics are strong, with a high Profitability Rank and margins that exceed industry averages. Growth prospects remain promising, as evidenced by the company's revenue and earnings growth rates. When compared to industry competitors, Formula Systems maintains a competitive edge, and its current valuation suggests that the stock is modestly undervalued, offering potential for investors. The company's consistent profitability and growth trajectory make it an attractive option for value investors seeking opportunities in the software sector.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
