Magic Software Enterprises (MGIC) versus ANSYS (ANSS) Head-To-Head Review

Magic Software Enterprises (NASDAQ: ANSS) and ANSYS (NASDAQ:ANSS) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, valuation, analyst recommendations, profitability and earnings.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Magic Software Enterprises and ANSYS, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magic Software Enterprises 1 0 2 0 2.33
ANSYS 2 5 7 0 2.36

Magic Software Enterprises currently has a consensus target price of $10.25, suggesting a potential upside of 18.50%. ANSYS has a consensus target price of $163.70, suggesting a potential downside of 4.49%. Given Magic Software Enterprises’ higher possible upside, equities analysts clearly believe Magic Software Enterprises is more favorable than ANSYS.

Earnings & Valuation

This table compares Magic Software Enterprises and ANSYS’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Magic Software Enterprises $257.99 million 1.63 $15.44 million $0.46 18.80
ANSYS $1.10 billion 13.19 $259.25 million $3.61 47.48

ANSYS has higher revenue and earnings than Magic Software Enterprises. Magic Software Enterprises is trading at a lower price-to-earnings ratio than ANSYS, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

9.9% of Magic Software Enterprises shares are held by institutional investors. Comparatively, 93.6% of ANSYS shares are held by institutional investors. 4.5% of Magic Software Enterprises shares are held by insiders. Comparatively, 1.1% of ANSYS shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Magic Software Enterprises and ANSYS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magic Software Enterprises 6.59% 10.92% 6.81%
ANSYS 25.98% 14.95% 11.96%

Risk and Volatility

Magic Software Enterprises has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, ANSYS has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Dividends

Magic Software Enterprises pays an annual dividend of $0.26 per share and has a dividend yield of 3.0%. ANSYS does not pay a dividend. Magic Software Enterprises pays out 56.5% of its earnings in the form of a dividend.

Summary

ANSYS beats Magic Software Enterprises on 13 of the 16 factors compared between the two stocks.

About Magic Software Enterprises

Magic Software Enterprises Ltd. provides proprietary application development, business process integration, vertical software solutions, and IT outsourcing software services in Israel and internationally. The company's Software Services segment develops, markets, sells, and supports a proprietary and none proprietary application platform, software applications, and business and process integration solutions and related services. Its IT Professional Services segment offers IT services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, and communications services and solutions, as well as supplemental outsourcing services. The company offers Magic xpa, a proprietary application platform for developing and deploying business applications; AppBuilder, a proprietary application platform for building, deploying, and maintaining high-end and mainframe-grade business applications; Magic xpi integration platform, a graphical wizard-based code-free solution; and Magic xpc, a hybrid integration platform as a service. It also provides vertical software solutions comprising Clicks, a software solution for healthcare providers; Leap, a software solution for business support systems; Hermes Solution, a packaged software solution for managing air cargo ground handling; HR Pulse, a customized single-tenant software as a service tool; and MBS Solution, a proprietary system for managing TV broadcast channels. In addition, the company provides software maintenance, support, training, and consulting services. It serves oil and gas, telecommunications, financial, healthcare, and industrial sectors, as well as public institutions and international agencies. The company was formerly known as Mashov Software Export (1983) Ltd. and changed its name to Magic Software Enterprises Ltd. in 1991. Magic Software Enterprises Ltd. was founded in 1983 and is headquartered in Or Yehuda, Israel.

About ANSYS

ANSYS, Inc. develops and markets engineering simulation software and services worldwide. The company offers ANSYS Workbench, a framework upon which the company's engineering simulation technologies are built; ANSYS multiphysics software to simulate the interactions between structures, heat transfer, fluids, and electronics in a unified engineering simulation environment; and structural analysis product suite that provides simulation tools for product design and optimization. It also provides fluids product suite that enables modeling of fluid flow and other related physical phenomena; electronics product suite, which provides field simulation software for designing electronic and electromechanical products; and power analysis and optimization software suite. In addition, the company offers power analysis and optimization software suite that manages the power budget, power delivery integrity, and power-induced noise in an electronic design; SCADE product suite, a solution for embedded software simulation, code production, and automated certification; system simulation capability for the design of automated products; and high-performance computing product suite, which delivers cross-physics parallel processing capabilities for simulation software. Further, it provides Discovery product family for use in the simulation of product design; academic product suite with a portfolio of academic products based on associate, research, and teaching; ANSYS medini analyze, a suite for functional safety analysis; and ANSYS Fluent that automatically refines the mesh. The company serves engineers, designers, researchers, and students in the aerospace and defense, automotive, electronics, semiconductors, energy, materials and chemical processing, turbomachinery, consumer products, healthcare, and sports industries and academia. ANSYS, Inc. was founded in 1970 and is headquartered in Canonsburg, Pennsylvania.

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