Formula Systems (1985) Ltd (FORTY, Financial) has experienced a notable uptick in its stock performance, with a 1.21% gain over the past week and an impressive 34.03% gain over the past three months. The company's market capitalization stands at $1.18 billion, and the current stock price is $78.75. When compared to the GF Value of $100.66, Formula Systems is currently considered modestly undervalued, a positive shift from its previous status of being significantly undervalued three months ago when the GF Value was $98.35. This change in valuation reflects a growing investor confidence in the company's prospects.
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, with a focus on software development and expansion. The company's primary revenue comes from Israel, and it is structured into segments that cater to various sectors, including insurance and workforce management. The Matrix segment is the largest revenue contributor, followed by the Sapiens and Magic Software segments.
Assessing Profitability
Formula Systems boasts a high Profitability Rank of 9/10, indicating a strong likelihood of continued profitable operations. The company's operating margin of 9.07% is better than 68.26% of its peers in the industry. Additionally, its return on equity (ROE) of 11.27% and return on assets (ROA) of 2.33% surpass the majority of competitors, with respective industry rankings of 69.13% and 56.49%. The return on invested capital (ROIC) stands at 8.98%, further demonstrating the company's efficient cash flow generation relative to its capital investment. Formula Systems has maintained profitability for the past 10 years, a testament to its consistent performance. 
Growth Trajectory
The company's Growth Rank is an impressive 8/10. Formula Systems has shown a solid 3-Year Revenue Growth Rate per Share of 14.40%, outperforming 63.53% of its industry counterparts. The 5-Year Revenue Growth Rate per Share is also strong at 13.90%, better than 70.76% of the industry. When it comes to earnings, the 3-Year EPS without NRI Growth Rate is 6.50%, and the 5-Year EPS without NRI Growth Rate is an exceptional 28.70%, surpassing 81.03% of the industry. These growth metrics underscore the company's robust expansion and earnings potential. 
Competitive Landscape
Formula Systems operates in a competitive environment, with key players like Nayax Ltd (XTAE:NYAX, Financial) holding a market cap of $940.163 million, Hilan Ltd (XTAE:HLAN, Financial) at $1.33 billion, and Magic Software Enterprises Ltd (XTAE:MGIC, Financial) with a market cap of $589.980 million. These companies, while operating in the same industry, have varying market capitalizations, with Formula Systems positioned comfortably among them.
Conclusion
In conclusion, Formula Systems (1985) Ltd's stock performance has been robust, with significant gains over the past three months. The company's profitability metrics are strong, with a high Profitability Rank and solid margins and returns. Growth indicators are equally promising, with revenue and earnings per share growth rates outpacing many industry peers. When compared to its competitors, Formula Systems holds a competitive market position, with a market cap that reflects its standing within the industry. The current valuation status, being modestly undervalued according to the GF Value, suggests that the stock may still have room for growth, making it an attractive option for value investors. Overall, Formula Systems appears to be on a solid footing, with a positive outlook for future performance.
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.
