Formula Systems (1985) (NASDAQ:FORTY) and Luxoft (NYSE:LXFT) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.
This table compares Formula Systems (1985) and Luxoft’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Formula Systems (1985)||1.83%||3.42%||1.68%|
Formula Systems (1985) pays an annual dividend of $0.47 per share and has a dividend yield of 1.3%. Luxoft does not pay a dividend.
This is a summary of recent ratings and recommmendations for Formula Systems (1985) and Luxoft, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Formula Systems (1985)||0||0||0||0||N/A|
Luxoft has a consensus target price of $49.63, suggesting a potential upside of 51.34%. Given Luxoft’s higher probable upside, analysts clearly believe Luxoft is more favorable than Formula Systems (1985).
Earnings and Valuation
This table compares Formula Systems (1985) and Luxoft’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Formula Systems (1985)||$1.36 billion||0.39||$10.35 million||N/A||N/A|
|Luxoft||$906.77 million||1.22||$57.01 million||$2.09||15.69|
Luxoft has lower revenue, but higher earnings than Formula Systems (1985).
Institutional and Insider Ownership
0.1% of Formula Systems (1985) shares are owned by institutional investors. Comparatively, 61.1% of Luxoft shares are owned by institutional investors. 23.3% of Formula Systems (1985) shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Risk and Volatility
Formula Systems (1985) has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Luxoft has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500.
Luxoft beats Formula Systems (1985) on 9 of the 13 factors compared between the two stocks.
About Formula Systems (1985)
Formula Systems (1985) Ltd., through its subsidiaries, provides software, proprietary and non-proprietary software, and software product marketing and support services. The company offers computer and telecommunication infrastructure solutions; computer solutions to computer and communications infrastructures; cloud computing solutions; database and big data services; customer relations management, computer systems management infrastructures, Web world content management, database and data warehouse mining, application integration, database and systems, data management, and software development tools; and professional training courses and advanced professional studies. It also markets and sells computers and peripheral equipment to business customers. In addition, the company offers life, pension, and annuities platforms/solutions, including Sapiens ALIS, LifeSuite, Life Portraits, LifeApply, Sapiens INSIGHT, and Sapiens Closed Books; property and casualty/general insurance platforms/solutions, such as Sapiens IDIT, Adaptik Policy, Adaptik Billing, Stream Claim, Sapiens Stingray, PowerSuite, and CompSuite; and reinsurance software solutions comprising Sapiens Reinsurance, Freedom Reinsurance System, and Universal Reinsurance System. Further, it provides financial and compliance solutions that include eFreedom Annual Statement, PRO Financial General Ledger and Accounts Payable, Preferred Tax Enterprise Financial applications, Insurance Financial reporting, and Power2Play; Sapiens DECISION, a decision management platform; and technology-based solutions and digital insurance suites. Additionally, the company offers application development and business process integration platforms; vertical software solutions; vendor of software services and IT outsourcing software services; and professionals in various areas, as well as develops on-premise payroll software solutions. The company was founded in 1985 and is headquartered in Or Yehuda, Israel.
Luxoft Holding, Inc., together with its subsidiaries, provides software development services and IT solutions to multinational corporations. The company offers application software development, software architecture design, performance engineering, optimization and testing, process consulting, and software quality assurance services; functional specification and mock-up, product design, engineering, automated testing, maintenance, support, and performance engineering services; and IT strategy, software engineering process, and data security consulting services. Its products and platforms include Populus, a tool chain for human machine interface (HMI) design and development, and the deployment of automotive user interfaces for distributed embedded systems; Qt Automotive Suite, which enables developers to create stunning user experience and ease the integration toward the system backend; AllView, an user-experience demonstrator; software tools and consulting services focused on scheduling analysis, architecture optimization, and timing verification; Pelux, a base development platform; and ARP, an automotive hardware reference platform. It serves financial services, automotive and transport, healthcare and life sciences, travel and aviation, technology, telecom, energy, and other industries. The company operates in North America, Europe, Russia, the Asia-Pacific, and internationally. Luxoft Holding, Inc. was founded in 2000 and is headquartered in Zug, Switzerland.
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