Magic (MGIC) AI Stock Analysis

• Market Cap: $1.29B
• Dividend Yield: 2.94%
• Average Volume (3M): 46.84K
• Price to Earnings (P/E): 32.4
• Beta (1Y): 0.67
• Revenue Growth: 12.65%
• EPS Growth: 14.80%
• Country: US
• Employees: 3,628
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 0.25
• Shares Outstanding: 49,099,304
• 10 Day Avg. Volume: 57,598
• 30 Day Avg. Volume: 46,836
• PEG Ratio: 0.00
• Price to Book (P/B): 2.13
• Price to Sales (P/S): 1.07
• P/FCF Ratio: 8.09
• Enterprise Value/Market Cap: 0.77
• Enterprise Value/Revenue: 1.65
• Enterprise Value/Gross Profit: 5.88
• Enterprise Value/Ebitda: 11.47
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): 1.03
• Revenue Forecast (FY): $605.10M

• Rating: 73 Outperform
• Price Target: $27.00 ▲(19.10% Upside)

Magic's overall stock score reflects strong financial performance and positive technical indicators, which are slightly offset by a high valuation. The company's consistent revenue growth and solid cash flow management are significant strengths, while the high P/E ratio suggests potential overvaluation. The absence of earnings call data and corporate events means these factors did not influence the score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term sustainability.

Cash Flow Generation

Strong cash flow generation enhances financial flexibility, enabling reinvestment in growth opportunities and resilience against downturns.

Merger with Matrix IT

The merger is expected to enhance Magic's market position and operational capabilities, aligning with Matrix's resources and strategic direction.

Negative Factors

Margin Pressures

Declining margins may indicate rising costs or pricing pressures, which could impact profitability if not managed effectively.

Operating Cash Flow Efficiency

Low conversion of income into cash can limit the company's ability to fund operations and growth without relying on external financing.

Leverage Concerns

While manageable, the leverage level requires careful monitoring to prevent financial strain and ensure long-term stability.

Magic Business Overview & Revenue Model

Company Description

Magic (MGIC) is a technology-driven company specializing in providing innovative solutions in the mobile and digital services sector. The company primarily focuses on enhancing user engagement through its suite of products, which includes mobile applications, digital marketing services, and user experience optimization tools. Magic aims to empower businesses by leveraging cutting-edge technology to create seamless and engaging interactions between brands and their customers.

How the Company Makes Money

Magic generates revenue through multiple key streams. Primarily, the company earns money from subscription fees for its software services, where businesses pay a recurring fee to access its suite of digital tools and analytics. Additionally, Magic monetizes through performance-based marketing services, charging clients based on the effectiveness of campaigns run through its platform. The company may also engage in partnerships with other tech firms and marketing agencies, providing integrated solutions that enhance its product offerings and expand its customer base. Furthermore, any strategic alliances with larger organizations can lead to increased visibility and additional revenue opportunities, contributing positively to Magic's financial performance.

Magic Financial Statement Overview

Summary

Magic exhibits strong financial health with consistent revenue growth, solid profitability, and effective cash flow management. The company maintains a balanced leverage position, though slight pressures on margins and cash conversion efficiency could be areas to monitor.

Income Statement

Magic has demonstrated consistent revenue growth, with a TTM revenue growth rate of 3.2%. The company maintains healthy margins, with a gross profit margin of 28.2% and a net profit margin of 6.6% in the TTM. While these figures indicate stability and profitability, the slight decline in gross profit margin compared to previous years suggests potential cost pressures.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 0.35, indicating manageable leverage. The return on equity is strong at 13.98%, reflecting efficient use of equity to generate profits. However, the equity ratio of 49.3% suggests a balanced but slightly leveraged capital structure.

Cash Flow

Magic's cash flow is robust, with a significant free cash flow growth rate of 22.9% in the TTM. The free cash flow to net income ratio of 0.93 indicates strong cash generation relative to profits. However, the operating cash flow to net income ratio of 0.33 suggests room for improvement in converting income into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	603.22M	552.52M	535.05M	566.79M	480.32M	371.19M
Gross Profit	169.17M	157.18M	152.99M	155.35M	132.99M	109.59M
EBITDA	86.68M	82.06M	82.27M	82.20M	74.47M	55.62M
Net Income	40.05M	36.88M	37.03M	40.47M	29.77M	25.19M
Balance Sheet
Total Assets	559.81M	540.33M	522.41M	510.97M	492.05M	443.32M
Cash, Cash Equivalents and Short-Term Investments	103.31M	120.40M	106.69M	86.97M	94.82M	89.65M
Total Debt	95.89M	86.15M	108.72M	79.79M	62.10M	49.40M
Total Liabilities	258.98M	239.26M	231.46M	205.70M	185.94M	149.34M
Stockholders Equity	276.04M	277.19M	265.98M	263.65M	265.25M	260.43M
Cash Flow
Free Cash Flow	64.49M	73.30M	67.37M	52.23M	42.23M	49.52M
Operating Cash Flow	66.34M	74.83M	68.99M	56.62M	43.67M	52.30M
Investing Cash Flow	-8.87M	-22.61M	-27.62M	-34.46M	-22.20M	-9.60M
Financing Cash Flow	-59.60M	-45.15M	-17.29M	-18.28M	-21.27M	-39.65M

Magic Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 22.67
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGIC, the sentiment is Positive. The current price of 22.67 is below the 20-day moving average (MA) of 24.92, below the 50-day MA of 22.77, and above the 200-day MA of 18.41, indicating a bullish trend. The MACD of 1.07 indicates Positive momentum. The RSI at 59.95 is Neutral, neither overbought nor oversold. The STOCH value of 47.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MGIC.

Magic Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GDYN	76 Outperform	$790.38M	57.57	2.96%	―	23.63%	427.13%
CTLP	74 Outperform	$780.45M	13.29	27.08%	―	12.94%	356.32%
MGIC	73 Outperform	$1.29B	32.36	14.36%	2.94%	12.65%	14.80%
FLYW	69 Neutral	$1.81B	―	-0.29%	―	22.71%	-111.24%
HCKT	65 Neutral	$540.99M	51.67	10.27%	2.36%	0.68%	-67.84%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
PSFE	47 Neutral	$461.43M	-3.73	-15.59%	―	-0.95%	-456.64%

Magic Corporate Events

Magic Software Shareholders Approve Merger at Extraordinary General Meeting

On December 10, 2025, Magic Software Enterprises Ltd. held an Extraordinary General Meeting where shareholders approved all resolutions related to a merger agreement, including the issuance of Matrix Ordinary Shares. The transaction is anticipated to close in the first quarter of 2026, contingent upon the fulfillment of certain conditions. This merger is expected to significantly impact Magic Software’s market positioning by expanding its reach and capabilities.

Magic Software Achieves Record Q3 2025 Financial Results

Magic Software Enterprises Ltd. reported record-breaking financial results for the third quarter and nine months ending September 30, 2025, with revenues reaching $161.7 million for the quarter, a 13.1% increase from the previous year. The company’s operating income also saw significant growth, with a 13.6% increase to $17.1 million, highlighting strong performance in both Israeli and North American markets.

Magic Software to Announce Q3 2025 Financial Results Amid Merger Plans

Magic Software Enterprises announced that it will release its financial results for the third quarter of 2025 on November 18. The company, which recently entered into a definitive merger agreement with Matrix IT Ltd., will forgo its Q3 2025 earnings call. This decision marks a significant step in Magic Software’s operational strategy, potentially impacting its market positioning and stakeholder interests.

Magic Software Announces Merger with Matrix IT

On November 3, 2025, Magic Software Enterprises Ltd. entered into a definitive merger agreement with Matrix IT Ltd., an Israeli public IT company, and its subsidiary, Magitrix Ltd. Under the agreement, Magic will become a wholly-owned subsidiary of Matrix, with Magic’s shareholders receiving Matrix ordinary shares, resulting in Magic shareholders holding 31.125% of Matrix’s shares post-merger. This merger, facilitated by a special committee, aims to maximize economic value for Magic’s shareholders and is subject to shareholder approval and other customary conditions. The merger is expected to enhance Magic’s market position and operational capabilities by aligning with Matrix’s resources and strategic direction.