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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Magic Software Enterprises's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2025 was 14.43%.
As of today (2026-08-17), Magic Software Enterprises's WACC % is 5.53%. Magic Software Enterprises's ROIC % is 14.63% (calculated using TTM income statement data).
Magic Software Enterprises generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Magic Software Enterprises's WACC % is 5.53%. Magic Software Enterprises's ROIC % is 14.63% (calculated using TTM income statement data).
Magic Software Enterprises generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Information Technology Services subindustry, Magic Software Enterprises's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Magic Software Enterprises ROIC % vs Software Industry
For the Software industry and Technology sector, Magic Software Enterprises's ROIC % distribution charts can be found below:
* The bar in red indicates where Magic Software Enterprises's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Sep. 2025) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Magic Software Enterprises (FRA:MGK) has a ROIC % of 14.43% as of Sep. 2025. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Magic Software Enterprises and its competitors.
Is Magic Software Enterprises' ROIC % too high?
Magic Software Enterprises' current ROIC % is 14.43%. The Software industry median ROIC % is 3.35. Magic Software Enterprises' value of 14.43% is 330.7% above this industry median. Overall, Magic Software Enterprises has a GF Score™ of 90/100, reflecting its overall financial health beyond just this single metric.
How does Magic Software Enterprises' ROIC % compare to IBM and ACN?
Magic Software Enterprises' ROIC % of 14.43% can be compared against companies in the Software industry. The industry median ROIC % is 3.35. Magic Software Enterprises' value of 14.43% is 330.7% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Software company?
The median ROIC % among Software companies is 3.35, based on 2,831 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Magic Software Enterprises's current ROIC % of 14.43% is 330.7% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Magic Software Enterprises and its competitors. For the Software industry, the median ROIC % is 3.35 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Magic Software Enterprises's current ROIC % is 14.43%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Magic Software Enterprises stock overvalued right now?
Magic Software Enterprises (FRA:MGK) has a current ROIC % of 14.43%. The stock's GF Value™ is €12.26, compared to a current price of €16.10 — trading 31.3% above its estimated fair value. The current ROIC % is 14.43% and 330.7% above the Software industry median of 3.35. Magic Software Enterprises' overall GF Score™ is 90/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Magic Software Enterprises (FRA:MGK), the current ROIC % is 14.43% as of Sep. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Magic Software Enterprises (FRA:MGK) Overvalued in 2026?
Based on GuruFocus' analysis, Magic Software Enterprises stock appears to be overvalued.
The current stock price of €16.10 is trading 31.3% above its estimated GF Value™ of €12.26.
Key valuation signals for FRA:MGK:
ROIC %: 14.43%
GF Value™: €12.26 vs. price of €16.10 (31.3% above fair value)
Industry Position: 330.7% above the Software median
No single metric tells the full story. See the FRA:MGK stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Magic Software Enterprises Ltd is a software development company. The company's operating segment includes Software Services and IT Professional Services. The company generates maximum revenue from the IT Professional Services segment. IT Professional Services segment offers IT services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, as well as supplemental outsourcing services. Geographically, it derives a majority of revenue from the United States and also has a presence in Israel, Europe, Japan, and Other countries.
90GF Score
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