Magic Software Enterprises (NASDAQ:MGIC) & Microsoft (NASDAQ:MSFT) Head to Head Survey

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

Volatility and Risk

Magic Software Enterprises has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Microsoft has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Magic Software Enterprises	6.60%	15.62%	8.76%
Microsoft	35.79%	32.74%	18.13%

Institutional and Insider Ownership

24.7% of Magic Software Enterprises shares are held by institutional investors. Comparatively, 71.1% of Microsoft shares are held by institutional investors. 4.5% of Magic Software Enterprises shares are held by company insiders. Comparatively, 0.0% of Microsoft shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Magic Software Enterprises pays an annual dividend of $0.65 per share and has a dividend yield of 3.6%. Microsoft pays an annual dividend of $3.32 per share and has a dividend yield of 0.7%. Magic Software Enterprises pays out 85.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Microsoft pays out 25.7% of its earnings in the form of a dividend. Magic Software Enterprises has raised its dividend for 1 consecutive years and Microsoft has raised its dividend for 23 consecutive years.

Earnings & Valuation

This table compares Magic Software Enterprises and Microsoft”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Magic Software Enterprises	$552.52 million	1.61	$36.88 million	$0.76	23.82
Microsoft	$245.12 billion	15.08	$88.14 billion	$12.94	38.44

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Magic Software Enterprises and Microsoft, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Magic Software Enterprises	0	1	1	0	2.50
Microsoft	0	4	29	0	2.88

Magic Software Enterprises presently has a consensus target price of $16.00, indicating a potential downside of 11.60%. Microsoft has a consensus target price of $521.14, indicating a potential upside of 4.76%. Given Microsoft’s stronger consensus rating and higher possible upside, analysts clearly believe Microsoft is more favorable than Magic Software Enterprises.

Summary

Microsoft beats Magic Software Enterprises on 15 of the 17 factors compared between the two stocks.

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.

About Microsoft

Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services. This segment also provides LinkedIn; and dynamics business solutions, including Dynamics 365, a set of intelligent, cloud-based applications across ERP, CRM, power apps, and power automate; and on-premises ERP and CRM applications. The Intelligent Cloud segment offers server products and cloud services, such as azure and other cloud services; SQL and windows server, visual studio, system center, and related client access licenses, as well as nuance and GitHub; and enterprise services including enterprise support services, industry solutions, and nuance professional services. The More Personal Computing segment offers Windows, including windows OEM licensing and other non-volume licensing of the Windows operating system; Windows commercial comprising volume licensing of the Windows operating system, windows cloud services, and other Windows commercial offerings; patent licensing; and windows Internet of Things; and devices, such as surface, HoloLens, and PC accessories. Additionally, this segment provides gaming, which includes Xbox hardware and content, and first- and third-party content; Xbox game pass and other subscriptions, cloud gaming, advertising, third-party disc royalties, and other cloud services; and search and news advertising, which includes Bing, Microsoft News and Edge, and third-party affiliates. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online, and retail stores. The company was founded in 1975 and is headquartered in Redmond, Washington.