Formula Systems (1985) Ltd (FORTY, Financial), a leading software company, has been making waves in the stock market with its impressive performance. As of August 11, 2023, the company's stock price stands at $78.5, marking a 4.67% gain for the day and a 6.11% increase over the past four weeks. With a market capitalization of $1.25 billion, Formula Systems has a GF Score of 94 out of 100, indicating the highest outperformance potential. This article will delve into the company's financial strength, profitability, growth, GF Value, and momentum ranks, providing a comprehensive analysis of its investment potential.
Financial Strength Analysis
Formula Systems' Financial Strength rank stands at 6 out of 10. This score is based on several factors, including an interest coverage of 11.22, indicating the company's ability to cover its interest expenses, and a debt to revenue ratio of 0.29, suggesting a manageable debt burden. The company's Altman Z score of 1.87, however, indicates potential financial distress, which investors should monitor closely.
Profitability Rank Analysis
The company's Profitability Rank is an impressive 9 out of 10. This high score is driven by a robust operating margin of 9.04%, a Piotroski F-Score of 5, and a consistent profitability trend over the past 10 years. The company's Operating Margin has also seen a positive trend, with a 5-year average of 9.50%, indicating a strong profitability potential.
Growth Rank Analysis
Formula Systems' Growth Rank is a perfect 10 out of 10, reflecting the company's strong revenue and profitability growth. The company has demonstrated a 5-year revenue growth rate of 13.90% and a 3-year revenue growth rate of 14.40%. Additionally, its 5-year EBITDA growth rate stands at an impressive 27.60%, indicating robust business operations growth.
GF Value Rank Analysis
The company's GF Value Rank is also at the maximum of 10 out of 10. This rank is determined by the price-to-GF-Value ratio, a proprietary metric calculated based on historical multiples and an adjustment factor based on the company's past returns, growth, and future business performance estimates.
Momentum Rank Analysis
Formula Systems' Momentum Rank is 5 out of 10. This rank is determined using the standardized momentum ratio and other momentum indicators, reflecting the company's stock price performance over the past year.
Competitive Analysis
When compared to its main competitors in the software industry, Formula Systems holds a strong position. Hilan Ltd (XTAE:HLAN, Financial) has a GF Score of 79, Nayax Ltd (XTAE:NYAX, Financial) has a GF Score of 19, and Magic Software Enterprises Ltd (XTAE:MGIC, Financial) has a GF Score of 80. This comparison indicates that Formula Systems is outperforming its competitors in terms of GF Score. More details can be found on the competitors page.
Conclusion
In conclusion, Formula Systems (1985) Ltd presents a promising investment opportunity, with strong growth, profitability, and GF Value ranks. However, investors should keep an eye on the company's financial strength, particularly its Altman Z score. With a GF Score of 94, the company has the highest outperformance potential, making it a compelling choice for value investors.
