Sapiens International (NASDAQ:SPNS – Get Free Report) and Magic Software Enterprises (NASDAQ:MGIC – Get Free Report) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, profitability, earnings, dividends, institutional ownership, analyst recommendations and risk.
Earnings & Valuation
This table compares Sapiens International and Magic Software Enterprises”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sapiens International | $564.33 million | 4.28 | $72.18 million | $1.14 | 37.84 |
| Magic Software Enterprises | $584.53 million | 2.03 | $36.88 million | $0.78 | 30.92 |
Dividends
Sapiens International pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Magic Software Enterprises pays an annual dividend of $0.59 per share and has a dividend yield of 2.4%. Sapiens International pays out 52.6% of its earnings in the form of a dividend. Magic Software Enterprises pays out 75.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sapiens International has increased its dividend for 3 consecutive years and Magic Software Enterprises has increased its dividend for 1 consecutive years.
Profitability
This table compares Sapiens International and Magic Software Enterprises’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sapiens International | 12.45% | 16.59% | 11.20% |
| Magic Software Enterprises | 6.58% | 15.85% | 8.89% |
Risk & Volatility
Sapiens International has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.
Insider and Institutional Ownership
30.7% of Sapiens International shares are owned by institutional investors. Comparatively, 24.7% of Magic Software Enterprises shares are owned by institutional investors. 16.0% of Sapiens International shares are owned by insiders. Comparatively, 4.5% of Magic Software Enterprises shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Analyst Ratings
This is a breakdown of current ratings and target prices for Sapiens International and Magic Software Enterprises, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sapiens International | 1 | 4 | 0 | 0 | 1.80 |
| Magic Software Enterprises | 0 | 3 | 1 | 0 | 2.25 |
Sapiens International currently has a consensus target price of $31.33, indicating a potential downside of 27.37%. Magic Software Enterprises has a consensus target price of $18.00, indicating a potential downside of 25.37%. Given Magic Software Enterprises’ stronger consensus rating and higher probable upside, analysts clearly believe Magic Software Enterprises is more favorable than Sapiens International.
Summary
Sapiens International beats Magic Software Enterprises on 11 of the 17 factors compared between the two stocks.
About Sapiens International
Sapiens International Corporation N.V. provides software solutions for the insurance industry in North America, the United Kingdom, Europe, the Middle East, Africa, the Asia Pacific, and internationally. The company provides various solutions for property and casualty commercial and personal lines, life and pensions, and reinsurance fields. It offers IDITSuite, an AI powered, end-to-end insurance software; DigitalSuite, a cloud-native, future-proof digital engagement platform; IDITGo, a pre-configured, data-enriched insurance launch and accelerator platform solutions; consultancy services for property and casualty commercial lines; and Tia Enterprise solution for customer engagement. The company also provides CoreSuite, an end-to-end cloud and digital PAS for individual and group products across life, health, wealth, and pensions; CustomerConnect, a dynamic self-service and persona-based portal to engage with insureds; AgentConnect, a portal for agents and brokers to focus on sales enablement, customer retention, and increasing customer value; and ReinsuranceMaster, a reinsurance automation software that provides insurers full financial control and flexibility over their entire reinsurance process. The company was founded in 1982 and is headquartered in Holon, Israel.
About Magic Software Enterprises
Magic Software Enterprises Ltd. provides proprietary application development, vertical software solutions, business process integration, information technologies (IT) outsourcing software services, and cloud-based services in Israel and internationally. Its Software Services segment develops, markets, sells, and supports application platform, software applications, and business and process integration solutions and related services. The company’s 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, and supplemental outsourcing services. It also offers proprietary application platforms, such as Magic xpa for developing and deploying business applications; AppBuilder for building, deploying, and maintaining business applications; Magic xpi for application integration; Magic xpi cloud native; FactoryEye for virtualization of production data; Magic Data Management and Analytics Platform for data management; and Magic SmartUX for cross-platform mobile business applications. The company also provides vertical software solutions comprising Clicks, a software solution for healthcare providers; Leap, a software solution for business support systems; Hermes Cargo, a packaged software solution for managing air cargo ground handling; HR Pulse, a single-tenant software as a service tool; MBS Solution, a system for managing TV broadcast management; Nativ, a system for management of rehabilitation centers; and Mobisale, a system for sales and distribution field activities for consumer goods manufacturers and wholesalers. In addition, It provides software maintenance, support, training, and consulting services. The company was formerly known as Mashov Software Export (1983) Ltd. and changed its name to Magic Software Enterprises Ltd. in 1991. The company was incorporated in 1983 and is headquartered in Or Yehuda, Israel.
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