Formula Systems (1985) Ltd (FORTY, Financial), a leading player in the software industry, is currently trading at $78.5 per share. The company has a market capitalization of $1.2 billion and has seen a stock price gain of 4.67% today. Over the past four weeks, the stock price has increased by 6.11%. The company's impressive performance is reflected in its high GF Score of 94 out of 100, indicating its high outperformance potential. The GF Score is a comprehensive stock performance ranking system developed by GuruFocus, which takes into account five key aspects of a company's valuation: Financial Strength, Profitability Rank, Growth Rank, GF Value Rank, and Momentum Rank.
Financial Strength Analysis
Formula Systems has a Financial Strength rank of 6 out of 10. This rank measures the robustness of a company's financial situation, taking into account factors such as its debt burden, debt to revenue ratio, and Altman Z-Score. The company's interest coverage is 11.22, indicating its ability to cover its interest expenses. Its debt to revenue ratio is 0.29, suggesting a manageable level of debt. However, its Altman Z score of 1.87 indicates potential financial distress.
Profitability Rank Analysis
The company's Profitability Rank is 9 out of 10, reflecting its high profitability. This rank is based on factors such as its operating margin, Piotroski F-Score, trend of the operating margin, consistency of profitability, and Predictability Rank. The company's operating margin is 9.04%, and its Piotroski F-Score is 5, indicating a healthy financial situation. The company has also demonstrated consistent profitability over the past 10 years.
Growth Rank Analysis
Formula Systems has a Growth Rank of 10 out of 10, indicating strong growth in terms of its revenue and profitability. The company's 5-year revenue growth rate is 13.90%, and its 3-year revenue growth rate is 14.40%. Its 5-year EBITDA growth rate is an impressive 27.60%, suggesting strong growth in its business operations.
GF Value Rank Analysis
The company's GF Value Rank is 9 out of 10, indicating that it is undervalued. This rank is determined by the price-to-GF-Value ratio, a proprietary metric calculated based on historical multiples and an adjustment factor based on a company's past returns and growth and future estimates of the business' performance.
Momentum Rank Analysis
Formula Systems has a Momentum Rank of 5 out of 10, reflecting its average momentum. This rank is determined using the standardized momentum ratio and other momentum indicators.
Competitor Analysis
When compared to its competitors, Formula Systems stands out with its high GF Score. Hilan Ltd has a GF Score of 79, Nayax Ltd has a GF Score of 20, and Magic Software Enterprises Ltd has a GF Score of 80. More details about these competitors can be found here.
Conclusion
In conclusion, Formula Systems (1985) Ltd's overall GF Score of 94 suggests a high potential for outperformance. The company's strong financial strength, high profitability, robust growth, undervalued status, and average momentum make it an attractive investment option. However, investors should also consider the company's potential financial distress as indicated by its Altman Z-Score.
