GoDaddy (NYSE:GDDY) vs. Formula Systems (1985) (NASDAQ:FORTY) Critical Survey

GoDaddy (NYSE:GDDY) and Formula Systems (1985) (NASDAQ:FORTY) are both technology companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitability, risk and institutional ownership.

Risk and Volatility

GoDaddy has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, Formula Systems (1985) has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Profitability

This table compares GoDaddy and Formula Systems (1985)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GoDaddy	17.83%	660.96%	11.32%
Formula Systems (1985)	21.57%	4.38%	2.13%

Insider and Institutional Ownership

90.3% of GoDaddy shares are held by institutional investors. Comparatively, 34.8% of Formula Systems (1985) shares are held by institutional investors. 0.9% of GoDaddy shares are held by company insiders. Comparatively, 23.3% of Formula Systems (1985) shares are held 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.

Valuation & Earnings

This table compares GoDaddy and Formula Systems (1985)”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GoDaddy	$4.95 billion	2.66	$875.00 million	$6.74	15.45
Formula Systems (1985)	$2.63 billion	0.69	$606.48 million	$39.83	2.97

GoDaddy has higher revenue and earnings than Formula Systems (1985). Formula Systems (1985) is trading at a lower price-to-earnings ratio than GoDaddy, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for GoDaddy and Formula Systems (1985), as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GoDaddy	1	8	10	0	2.47
Formula Systems (1985)	0	1	0	0	2.00

GoDaddy presently has a consensus target price of $110.69, suggesting a potential upside of 6.30%. Given GoDaddy’s stronger consensus rating and higher probable upside, analysts plainly believe GoDaddy is more favorable than Formula Systems (1985).

Summary

GoDaddy beats Formula Systems (1985) on 10 of the 14 factors compared between the two stocks.

About GoDaddy

GoDaddy Inc. engages in the design and development of cloud-based products in the United States and internationally. It operates through two segments: Applications and Commerce, and Core Platform. The Applications and Commerce segment provides applications products, including Websites + Marketing, a mobile-optimized online tool that enables customers to build websites and e-commerce enabled online stores; and Managed WordPress, a streamlined and optimized website building that allows customers to easily build and manage a faster WordPress site; Managed WooCommerce Stores to sell anything and anywhere online; and marketing tools and services, such as GoDaddy Studio mobile application, search engine optimization, Meta and Google My Business, and email and social media marketing designed to help businesses acquire and engage customers and create content. The segment also offers connected commerce comprising Smart Terminal, a dual screen all-in-one Point-of-Sale system that allows customers to manage in-store inventory and product catalogs and take payments; GoDaddy Payments, a payment facilitator that enables customers to accept all major forms of payments; and email service plans with a multi-feature web interface, and Microsoft Office 365 accounts that connects to customers’ domains. The Core Platform segment offers domain products, including primary registrations, domain aftermarket platform, and domain name add-ons, as well as GoDaddy Registry, a provider of domain name registry services; and hosting and security services comprising shared website hosting, virtual private servers, and managed wordpress hosting services, as well as security products with a comprehensive suite of tools designed to help secure customers’ online presence. The company serves small businesses, individuals, organizations, developers, designers, and domain investors. GoDaddy Inc. was founded in 1997 and is headquartered in Tempe, Arizona.

About Formula Systems (1985)

Formula Systems (1985) Ltd., through its subsidiaries, provides proprietary and non-proprietary software solutions, IT professional services, software product marketing and support, computer infrastructure and integration solutions, and learning and integration worldwide. The company offers computer and telecommunication infrastructure solutions; and sells and markets computers and peripheral equipment, and cloud based solutions and services relating to databases and big data. It also provides 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 application and professional training courses, and advanced professional studies. In addition, the company offers property and casualty insurance platforms, such as Sapiens, Sapiens CoreSuite, Sapiens IDITSuite, and IDIT Go; life, pension, and annuities platforms, including Sapiens, Sapiens CoreSuite, Sapiens UnderwritingPro, Sapiens ApplicationPro, Sapiens IllustrationPro, and Sapiens ConsolidationMaster; Sapiens Cloud-based DigitalSuite; data and analytics platform; and reinsurance software solutions comprising Sapiens ReinsuranceMaster, Sapiens ReinsurancePro, and Sapiens Reinsurance GO. Further, it provides Sapiens workers' compensation solutions; Sapiens medical professional liability solutions; financial and compliance solutions, such as Sapiens FinancialPro, Sapiens Financial GO, Sapiens StatementPro, Sapiens CheckPro, and Sapiens Reporting Tools; Sapiens Decision; and technology-based solutions. Additionally, it offers application development and business process integration platforms; vertical software solutions; strategic consulting and outsourcing services; and professional services in various areas, as well as develops on-premise payroll software. The company was incorporated in 1985 and is headquartered in Or Yehuda, Israel.