Magic (MGIC) AI Stock Analysis

• Market Cap: $956.95M
• Dividend Yield: 2.95%
• Average Volume (3M): 44.80K
• Price to Earnings (P/E): 25.0
• Beta (1Y): 0.71
• Revenue Growth: 11.98%
• EPS Growth: 14.91%
• Country: US
• Employees: 3,628
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 0.26
• Shares Outstanding: 49,099,304
• 10 Day Avg. Volume: 40,987
• 30 Day Avg. Volume: 44,801
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 1.70
• Enterprise Value/Gross Profit: 6.02
• Enterprise Value/Ebitda: 11.58
• 1Y Price Target: $18.00
• Price Target Upside: -5.81% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 77 Outperform
• Price Target: $22.00 ▲(15.12% Upside)

Magic's strong financial performance and positive earnings call sentiment are the primary drivers of its overall score. While technical indicators suggest some short-term weakness, the company's robust growth prospects and moderate valuation support a favorable long-term outlook.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, enhancing Magic's competitive position.

AI Project Success

High success rate in AI projects showcases Magic's technological edge and strengthens its reputation in a growing industry.

Strong Financial Health

A stable balance sheet with low leverage supports financial flexibility and resilience against economic fluctuations.

Negative Factors

Decreased Cash Flow

Reduced cash flow from operations may limit Magic's ability to invest in growth initiatives and manage financial obligations.

Increased Financial Debt

Rising debt levels could strain Magic's financial resources, impacting its long-term investment capacity and risk profile.

Gross Margin Decline

A decline in gross margin may indicate increased costs or pricing pressures, potentially affecting profitability.

Magic Business Overview & Revenue Model

Company Description

Magic Software Enterprises Ltd. provides proprietary application development, business process integration, vertical software solutions, and information technologies (IT) outsourcing software services in Israel and internationally. The company's Software Services segment develops, markets, sells, and supports application platform, software applications, and business and process integration solutions and related services. Its 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. The company offers proprietary application platforms, such as Magic xpa for developing and deploying business applications; AppBuilder for building, deploying, and maintaining high-end and mainframe-grade business applications; Magic xpi for application integration; FactoryEye for virtualization of production data; BusinessEye for organizational business intelligence; and Magic SmartUX for cross-platform mobile business applications. It 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, the company 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. Magic Software Enterprises Ltd. was incorporated in 1983 and is headquartered in Or Yehuda, Israel.

How the Company Makes Money

Magic generates revenue through a combination of subscription fees, transaction-based fees, and professional service contracts. The company offers tiered subscription plans for its software products, allowing businesses to pay for access to various features based on their needs. Additionally, Magic earns revenue from transaction fees when businesses utilize its platforms for mobile marketing campaigns and customer engagement initiatives. Significant partnerships with major brands and technology providers further enhance its revenue streams by facilitating co-marketing opportunities and expanding its customer base.

Magic Financial Statement Overview

Summary

Magic demonstrates strong financial health with consistent revenue growth, solid profitability, and effective cash flow management. The company maintains a stable balance sheet with a balanced approach to leverage and a strong return on equity.

Income Statement

Magic has demonstrated consistent revenue growth, with a notable increase of 3.01% in the latest TTM period compared to the previous annual report. The company shows strong profitability, with a gross profit margin of 28.3% and a net profit margin of 6.61% for TTM. Both EBIT and EBITDA margins are healthy at 10.99% and 14.72%, respectively, indicating effective cost management and operational efficiency.

Balance Sheet

Magic maintains a stable balance sheet with a debt-to-equity ratio of 0.3, reflecting a balanced approach to leverage. The equity ratio of 50.45% demonstrates a solid financial structure with significant equity backing. Return on equity stands at 13.97%, which is a strong indicator of profitability relative to shareholder investments.

Cash Flow

The company's cash flow is robust, with a strong operating cash flow to net income ratio of 1.64, indicating effective cash generation from operations. Free cash flow remains healthy at $57.56 million, although there is a 21.31% decrease compared to the previous period. However, the free cash flow to net income ratio of 1.53 still highlights solid cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	569.14M	552.52M	535.05M	566.79M	480.32M	371.19M
Gross Profit	161.11M	157.18M	152.99M	155.35M	132.99M	109.59M
EBITDA	83.77M	82.06M	82.27M	82.20M	74.47M	55.62M
Net Income	37.65M	36.88M	37.03M	40.47M	29.77M	25.19M
Balance Sheet
Total Assets	534.11M	540.33M	522.41M	510.97M	492.05M	443.32M
Cash, Cash Equivalents and Short-Term Investments	105.02M	120.40M	106.69M	86.97M	94.82M	89.65M
Total Debt	82.12M	86.15M	108.72M	79.79M	62.10M	49.40M
Total Liabilities	241.07M	239.26M	231.46M	205.70M	185.94M	149.34M
Stockholders Equity	269.41M	277.19M	265.98M	263.65M	265.25M	260.43M
Cash Flow
Free Cash Flow	57.56M	73.16M	64.19M	41.86M	35.86M	46.22M
Operating Cash Flow	61.72M	74.83M	68.99M	49.52M	40.49M	52.30M
Investing Cash Flow	-25.75M	-22.61M	-27.62M	-27.34M	-18.45M	-9.60M
Financing Cash Flow	-58.19M	-45.15M	-17.29M	-18.35M	-21.27M	-39.65M

Magic Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 19.11
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGIC, the sentiment is Neutral. The current price of 19.11 is below the 20-day moving average (MA) of 19.87, below the 50-day MA of 20.26, and above the 200-day MA of 15.58, indicating a neutral trend. The MACD of -0.17 indicates Positive momentum. The RSI at 39.71 is Neutral, neither overbought nor oversold. The STOCH value of 17.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MGIC.

Magic Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGIC	77 Outperform	$956.95M	24.99	14.04%	2.95%	11.98%	14.91%
FLYW	73 Outperform	1.61B	323.60	0.86%	―	22.20%	―
CTLP	69 Neutral	774.77M	12.30	25.43%	―	12.64%	457.40%
GDYN	66 Neutral	690.06M	39.51	3.19%	―	22.27%	―
HCKT	61 Neutral	541.14M	32.85	14.15%	2.44%	4.18%	-51.62%
PSFE	57 Neutral	779.13M	-15.07	2.52%	―	0.47%	-292.07%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Magic Corporate Events

Magic Software Announces Strong Q2 and H1 2025 Financial Results

On August 13, 2025, Magic Software Enterprises Ltd. announced its financial results for the second quarter and first half of 2025, ending June 30. The company reported a revenue increase of 11.3% for Q2 2025 compared to the same period last year, reaching $151.6 million. Net income attributable to shareholders rose by 9.8% to $9.9 million. For the first half of 2025, revenues increased by 12.0% to $299.0 million, with net income rising by 8.8% to $19.4 million. The company also revised its full-year 2025 revenue guidance to a range of $600 million to $610 million, reflecting sustained operational momentum. Additionally, a semi-annual cash dividend of 29.6 cents per share was declared, totaling approximately $14.5 million.

Magic Software to Release Q2 and H1 2025 Financial Results on August 13

Magic Software Enterprises announced on July 29, 2025, that it will release its financial results for the second quarter and first half of 2025 on August 13, 2025. The announcement is significant for stakeholders as it provides insights into the company’s financial health and operational performance, potentially impacting its market positioning and investor relations.