Mitek Systems (NASDAQ:MITK) versus Magic Software Enterprises (NASDAQ:MGIC) Financial Contrast

Magic Software Enterprises (NASDAQ:MGIC) and Mitek Systems (NASDAQ:MITK) are both small-cap technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, earnings, valuation, profitability and analyst recommendations.

Valuation and Earnings

This table compares Magic Software Enterprises and Mitek Systems”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	$603.22 million	1.41	$36.88 million	$0.81	21.46
Mitek Systems	$197.90 million	4.16	$8.80 million	$0.47	38.83

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Magic Software Enterprises and Mitek Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Magic Software Enterprises	0	1	0	0	2.00
Mitek Systems	0	1	2	0	2.67

Mitek Systems has a consensus target price of $19.33, indicating a potential upside of 5.94%. Given Mitek Systems’ stronger consensus rating and higher probable upside, analysts plainly believe Mitek Systems is more favorable than Magic Software Enterprises.

Insider & Institutional Ownership

24.7% of Magic Software Enterprises shares are held by institutional investors. Comparatively, 83.6% of Mitek Systems shares are held by institutional investors. 4.5% of Magic Software Enterprises shares are held by insiders. Comparatively, 2.2% of Mitek Systems shares are held by 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 & Volatility

Magic Software Enterprises has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Mitek Systems has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Magic Software Enterprises	6.61%	16.28%	8.96%
Mitek Systems	11.39%	19.16%	11.32%

Summary

Mitek Systems beats Magic Software Enterprises on 10 of the 14 factors compared between the two stocks.

About Magic Software Enterprises

Magic Software Enterprises is an Israel-based software company that develops tools for application development, systems integration and business process automation. Its products include Magic xpa, a low-code platform for building business applications, and Magic xpi, an integration platform that connects applications, data and business processes. The company also provides IT consulting, professional services and managed services, helping organizations implement and maintain software systems. Its offerings support customers seeking to modernize applications, connect cloud and on-premises systems, and automate operational workflows.

About Mitek Systems

Mitek Systems, Inc. (NASDAQ: MITK) develops software for digital identity verification and mobile banking. Its solutions help financial institutions and businesses verify identities, detect fraud, and make digital interactions more secure. The company’s products include identity verification tools that use document and biometric checks, as well as mobile image-capture technology. Mitek also provides mobile check deposit and related solutions that enable customers to deposit checks through a banking app.