Formula Systems (FORTY) AI Stock Analysis

• Market Cap: $2.71B
• Dividend Yield: 0.8%
• Average Volume (3M): 413.00
• Price to Earnings (P/E): 40.4
• Beta (1Y): 0.70
• Revenue Growth: 6.98%
• EPS Growth: -4.56%
• Country: US
• Employees: 21,900
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 1.14
• Shares Outstanding: 15,332,667
• 10 Day Avg. Volume: 462
• 30 Day Avg. Volume: 413
• PEG Ratio: 0.69
• Price to Book (P/B): 2.01
• Price to Sales (P/S): 0.49
• P/FCF Ratio: 4.61
• Enterprise Value/Market Cap: 1.30
• Enterprise Value/Revenue: 1.23
• Enterprise Value/Gross Profit: 5.18
• Enterprise Value/Ebitda: 12.80
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: $186.00 ▼(-2.39% Downside)

Formula Systems scores well due to strong financial performance and positive technical indicators. The company's robust growth and profitability, along with bullish market momentum, are significant strengths. However, the high P/E ratio suggests potential overvaluation, which slightly tempers the overall score.

Positive Factors

Revenue Growth

The significant revenue growth indicates strong demand for Formula Systems' offerings, suggesting a robust market position and effective sales strategy.

Cash Flow Management

Strong cash flow growth and efficient cash management enhance financial flexibility, supporting future investments and operational stability.

Strategic Acquisition

The strategic acquisition and stake in Sapiens position Formula Systems to benefit from AI and SaaS advancements, strengthening its competitive edge.

Negative Factors

Net Income Decline

A decline in net income could indicate challenges in cost management or market pressures, potentially affecting profitability and investor confidence.

Equity Ratio

While stable, the equity ratio suggests limited room for leveraging equity, which may constrain financial flexibility in capital-intensive projects.

Earnings Growth

Negative EPS growth reflects challenges in scaling profitability, which could impact long-term earnings potential and shareholder returns.

Formula Systems Business Overview & Revenue Model

Company Description

Formula Systems (1985) Ltd., through its subsidiaries, provides proprietary and non-proprietary software solutions, IT professional services, software product marketing and support, and computer infrastructure and integration solutions worldwide. The company offers computer and telecommunication infrastructure solutions; computer solutions to computer and communications infrastructures; cloud computing solutions; and database and big data services. It also provides customer relations management, computer systems management infrastructures, web world content management, database and data warehouse mining, application integration, database and system, data management, and software development tools; and professional training courses and advanced professional studies. In addition, it markets and sells computers and peripheral equipment to business customers; offers property and casualty insurance platforms, such as Sapiens, Sapiens CoreSuite, Sapiens IDITSuite, Sapiens PolicyPro, Sapiens BillingPro, Sapiens ClaimsPro, e-Tica, and Tia Enterprise; life, pension, and annuities platforms, including Sapiens CoreSuite, Sapiens UnderwritingPro, Sapiens ApplicationPro, Sapiens IllustrationPro, and Sapiens ConsolidationMaster; reinsurance software solutions comprising Sapiens ReinsuranceMaster, Sapiens ReinsurancePro, and Sapiens Reinsurance GO; and Sapiens platform for workers' compensation solutions. Further, the company provides financial and compliance solutions that include Sapiens FinancialPro, Sapiens Financial GO, and Sapiens StatementPro; Sapiens DECISION, a decision management platform; 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. Formula Systems (1985) Ltd. was incorporated in 1985 and is headquartered in Or Yehuda, Israel.

How the Company Makes Money

Formula Systems generates revenue through multiple streams, primarily by providing tailored software solutions and IT services to its clients. The company charges fees for software development projects, consulting services, and ongoing support and maintenance contracts. Additionally, FORTY earns income from licensing proprietary software products and from partnerships with technology vendors that allow them to resell software licenses. Strategic collaborations with key industry players also contribute to revenue growth by expanding their market reach and enhancing service offerings. Overall, the company's diversified portfolio and focus on high-demand technological solutions enable it to effectively capitalize on market opportunities.

Formula Systems Financial Statement Overview

Summary

Formula Systems demonstrates strong financial health with solid growth and profitability. The income statement shows a revenue growth of 5.2% and healthy profit margins. The balance sheet is stable with a reasonable debt-to-equity ratio, though there is room for improvement in the equity ratio. Cash flow analysis highlights robust free cash flow growth and efficient cash management.

Income Statement

The income statement reflects solid growth and profitability. Over the past year, revenue grew by 5.2%, indicating a positive growth trajectory. Gross profit margin stands at 24.8%, and net profit margin improved to 2.9%, showcasing efficient cost management. Both EBIT and EBITDA margins are healthy at 9.6% and 9.8%, respectively, demonstrating strong operational performance.

Balance Sheet

The balance sheet is stable with a debt-to-equity ratio of 0.95, reflecting a balanced leverage position. Return on equity is reasonable at 11.7%, indicating effective use of equity. The equity ratio is 22.5%, showing a solid equity base relative to total assets. These metrics suggest a well-managed capital structure, though there is room for improvement in equity ratio.

Cash Flow

Cash flow analysis shows robust free cash flow growth of 12.4% year-over-year. The operating cash flow to net income ratio is 4.1, indicating strong cash generation relative to net income. Similarly, the free cash flow to net income ratio is 3.7, underscoring efficient cash utilization. These metrics highlight effective cash management and operational efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.89B	2.76B	2.62B	2.57B	2.41B	1.93B
Gross Profit	682.39M	684.03M	643.71M	622.47M	563.86M	447.43M
EBITDA	276.24M	386.02M	371.23M	396.96M	332.65M	264.97M
Net Income	71.75M	79.67M	64.01M	81.39M	54.59M	46.78M
Balance Sheet
Total Assets	3.33B	3.01B	2.81B	2.79B	2.75B	2.52B
Cash, Cash Equivalents and Short-Term Investments	432.08M	563.20M	528.17M	569.06M	512.46M	533.15M
Total Debt	638.70M	689.45M	669.99M	772.67M	712.91M	668.54M
Total Liabilities	1.75B	1.63B	1.50B	1.62B	1.57B	1.41B
Stockholders Equity	777.69M	679.34M	625.76M	551.87M	540.96M	502.73M
Cash Flow
Free Cash Flow	0.00	295.49M	262.97M	199.82M	177.42M	258.13M
Operating Cash Flow	0.00	324.45M	294.97M	239.14M	208.48M	286.94M
Investing Cash Flow	0.00	-78.18M	-139.24M	-74.30M	-110.19M	-177.03M
Financing Cash Flow	0.00	-184.96M	-243.18M	-70.98M	-114.13M	9.73M

Formula Systems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 190.56
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FORTY, the sentiment is Positive. The current price of 190.56 is above the 20-day moving average (MA) of 171.87, above the 50-day MA of 157.42, and above the 200-day MA of 124.59, indicating a bullish trend. The MACD of 7.57 indicates Negative momentum. The RSI at 70.42 is Negative, neither overbought nor oversold. The STOCH value of 63.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FORTY.

Formula Systems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FORTY	75 Outperform	$2.71B	40.44	8.18%	0.80%	6.98%	-4.56%
FLYW	69 Neutral	$1.77B	-516.79	-0.29%	―	22.71%	-111.24%
GLOB	67 Neutral	$3.00B	30.09	4.91%	―	5.56%	-42.38%
ASGN	66 Neutral	$2.13B	16.81	7.25%	―	-4.86%	-25.15%
DXC	62 Neutral	$2.63B	7.46	12.33%	―	-4.13%	2143.48%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
AI	47 Neutral	$1.98B	-4.96	-46.77%	―	1.84%	-27.74%

Formula Systems Corporate Events

Formula Systems Reports Q3 2025 Financial Results Amid Sapiens Acquisition

On November 20, 2025, Formula Systems announced its financial results for the third quarter and nine-month period ending September 30, 2025. The company reported a 23.6% increase in quarterly revenues to $696.6 million and a 10.8% rise in operating income to $54.6 million. However, net income from continued operations decreased by 26.4% to $11.6 million. The results reflect the impact of Sapiens International Corporation’s acquisition by Advent, with Formula retaining an 18% stake. This strategic move is expected to accelerate Sapiens’ transition to AI and SaaS, enhancing its insurance solutions. Additionally, Formula Systems declared a dividend of NIS 1.64 per share, payable on January 13, 2026.