Formula Systems (1985) Ltd (FORTY, Financial) has recently caught the attention of investors with its notable stock performance. The company's market capitalization stands at a robust $1.06 billion, with the current stock price at $69.87. Over the past week, the stock has experienced a 5.82% gain, and looking at the past three months, the gain extends to an impressive 17.39%. This upward trajectory is particularly significant when considering the GF Value of $99.47, which suggests that the stock is significantly undervalued. This is a marked improvement from the past GF Value of $92.24, where the stock was considered a possible value trap, warranting caution from investors.
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 information technology services. The company's business is segmented into Matrix, Sapiens, and Magic Software, each focusing on different IT service areas, with the majority of revenue generated from the Israeli market. The company's diverse portfolio and strategic focus on software development and IT services have positioned it well within the competitive landscape of the software industry.
Assessing Formula Systems' Profitability
Formula Systems' financial health is reflected in its Profitability Rank of 8/10, indicating a strong ability to generate profits relative to its peers. The company's operating margin stands at 9.07%, outperforming 69.09% of 2,750 companies in the same sector. Additionally, the return on equity (ROE) is at 11.27%, surpassing 69.87% of 2,632 companies, while the return on assets (ROA) at 2.33% is better than 57.22% of 2,817 companies. The return on invested capital (ROIC) is also commendable at 8.98%, higher than 69.05% of 2,811 companies. These figures, coupled with a consistent track record of profitability over the past decade, underscore the company's solid financial foundation.
Growth Prospects of Formula Systems
Formula Systems' growth narrative is equally compelling, with a Growth Rank of 9/10. The company has demonstrated a 3-Year Revenue Growth Rate per Share of 14.40%, outpacing 63.18% of 2,401 companies. Over a 5-year period, the Revenue Growth Rate per Share is at 13.90%, better than 71.29% of 1,881 companies. The 3-Year EPS without NRI Growth Rate is 6.50%, which is higher than 44.22% of 1,997 companies, and the 5-Year EPS without NRI Growth Rate is an impressive 28.70%, surpassing 79.41% of 1,214 companies. These growth metrics reflect the company's ability to expand its revenue and earnings at a rate that is attractive to investors looking for long-term value.
Competitive Landscape
When compared to its competitors, Formula Systems holds its ground with a market cap that is competitive within its industry. Hilan Ltd (XTAE:HLAN, Financial) has a market cap of $1.34 billion, slightly larger than Formula Systems. Nayax Ltd (XTAE:NYAX, Financial) follows with a market cap of $891.858 million, and Magic Software Enterprises Ltd (XTAE:MGIC, Financial) has a market cap of $539.695 million. These figures indicate that Formula Systems is a significant player in the software industry, with a market position that can leverage for further growth and expansion.
Conclusion
In summary, Formula Systems (1985) Ltd's recent stock performance has been remarkable, with a 17.39% gain over the past three months and a current valuation that suggests the stock is significantly undervalued according to the GF Value. The company's strong profitability and growth prospects, as evidenced by its high Profitability and Growth Ranks, make it an attractive option for value investors. When compared to its industry competitors, Formula Systems demonstrates a competitive edge in market capitalization and financial metrics. For investors seeking a robust stock in the software industry, Formula Systems presents a compelling case for consideration.
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.
