About MAGIC SOFTWARE ENTERPRISES LTD
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; Magic xpc, a hybrid integration platform as a service; Magic SmartUX, a mobile development application platform; and FactoryEye for virtualization of production data. It also provides vertical software solutions comprising Clicks, a software solution for healthcare providers; Leap, a software solution for business support systems; Hermes Solution, a packaged software solution for managing air cargo ground handling; HR Pulse, a customized single-tenant software as a service tool; and MBS Solution, a proprietary system for managing TV broadcast management. In addition, the company provides software maintenance, support, training, and consulting services.
It serves oil and gas, telecommunications, financial, healthcare, and industrial sectors; and public institutions and international agencies. 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.
MGIC operates in the Services | Computer Software | approximately 3,680 employees | led by CEO Guy S. Bernstein.
The $6.5B question: What happens when a company this good becomes this expensive?
On Wall Street, there are companies that move money, and then there are companies that are the money. MGIC INVESTMENT CORP falls squarely into the latter category — a financial infrastructure so embedded in the global economy that to bet against it feels almost like betting against commerce itself.
At $6.5B in market capitalization, MGIC INVESTMENT CORP (MTG) currently ranks #135 in our quantitative model, with a composite score of 77.7/100. That places it firmly in "Strong Buy" territory — our highest conviction rating.
But here's the thing about stocks priced for perfection: They leave no room for error.
The Numbers That Matter
Let's start with what's undeniably true. Our 6-factor model gives MTG the following scores:
| Factor | Score | Weight | Assessment |
|---|---|---|---|
| Quality | 74/100 | 30% | Strong |
| Value | 92/100 | 15% | Attractive |
| Momentum | 68/100 | 25% | Steady |
| Investment | 38/100 | 10% | Low |
| Stability | 67/100 | 10% | Solid |
| Short Interest | 49/100 | 10% | Normal |
The quality score of 74/100 is the headline here. It reflects profitability metrics that would make most CFOs weep with envy:
- ROE: 14.6%
- Net Margin: 64.7%
- Gross Margin: N/A
These aren't just good numbers. They're the kind of numbers that make MTG a "must-own" stock for institutional portfolios.
The Bull Case
"If you could design a business in a laboratory, it would look something like MTG."
The bull case writes itself:
- Quality is persistent. Academic research shows high-quality stocks outperform by 4-6% annually over long periods. MTG is quality defined.
- Momentum is real. With a momentum score of 68/100, the stock has been recognized by the market — and momentum tends to persist.
- The moat is deep. Companies with these margins don't lose them easily. The competitive position is entrenched.
The Bear Case
But here's what keeps value investors up at night:
- Valuation compression risk. At current levels, the stock is priced for continued perfection. Any stumble — a missed quarter, a competitive threat, a macro slowdown — could compress the multiple from 8.7x to the low 20s. That's a 20-30% decline without anything fundamentally "wrong."
- The crowded trade problem. When everyone owns a stock, who's left to buy? Momentum works until it doesn't.
- Mean reversion. Trees don't grow to the sky. At some point, growth decelerates.
The Valuation Framework
| Scenario | Assumption | Fair Value | Upside/Downside |
|---|---|---|---|
| Bear | Multiple compression to 20x | -20% | Downside |
| Base | Current trajectory continues | +10-15% | Modest upside |
| Bull | Momentum accelerates | +30-40% | Significant upside |
The risk-reward is ... fine. Not exceptional. Not terrible. Just fine.
The Bottom Line
MGIC INVESTMENT CORP is exactly what it appears to be: a high-quality business with strong momentum trading at a premium price. Whether that's attractive depends entirely on what kind of investor you are.
For long-term, buy-and-hold investors, MTG is a core holding. For value investors or short-term traders, look elsewhere.
The company is priced for perfection — and in markets, as in life, perfection is a fragile thing.
⭐⭐⭐⭐⭐ Rating: 5-Star Strong Buy
Score: 77.7/100 | Rank: #135 of 3,571 stocks
Sector: Financials
This analysis reflects the views of Blank Capital Research as of February 16, 2026. It is not investment advice. Past performance does not guarantee future results.