IMPORTANT DISCLAIMER: Blank Capital Research ("BCR") is a technology platform, not a registered investment advisor or broker-dealer. The algorithmically generated signals, scores, and rankings provided on this site ("God Mode" Signals) are for informational and research purposes only and do not constitute financial advice, investment recommendations, or an offer to sell or solicit an offer to buy any securities.
HYPOTHETICAL PERFORMANCE RESULTS: The "timing scores" and "regime signals" displayed are based on quantitative models. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity.
RISK OF LOSS: Trading in financial markets involves a high degree of risk and may result in the loss of your entire investment. Data provided by third-party sources (Intrinio, Snowflake) is believed to be reliable but is not guaranteed for accuracy or completeness. Past performance is not indicative of future results.
© 2026 Blank Capital Research. All rights reserved. System Version: Aegis V8 (God Mode).
Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#163
Positioning
Market Dominance
Services
Computer Software
$576M
Guy S. Bernstein
Magic Software Enterprises Ltd. provides proprietary application development, business process integration, vertical software solutions, and information technologies (IT) outsourcing software services. The company's Software Services segment develops, markets, sells, and supports application platform, software applications, and business and process integration solutions and related services. It serves oil and gas, telecommunications, financial, healthcare, and industrial sectors.
Get full access to institutional-quality research tools with Blank Capital Pro.
Upgrade to ProStarting at $19.99/mo
Get full access to institutional-quality research tools with Blank Capital Pro.
Upgrade to ProStarting at $19.99/mo
Dates updated upon official exchange announcement.
Get full access to institutional-quality research tools with Blank Capital Pro.
Upgrade to ProStarting at $19.99/mo
Get full access to institutional-quality research tools with Blank Capital Pro.
Upgrade to ProStarting at $19.99/mo
Get full access to institutional-quality research tools with Blank Capital Pro.
Upgrade to ProStarting at $19.99/mo
X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = MGIC ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$YALA Yalla Group Ltd | 75 | 89 | 99 | 80 | - | - | 21.3% | 18.6% | 64.5% | 35.7% | 39.5% | 6.5% | 0.0% | 0.0x | $644M | VS | |
$GRVY GRAVITY Co., Ltd. | 75 | 82 | 96 | 71 | - | - | 15.4% | 12.6% | 38.7% | 17.1% | 17.0% | -39.7% | 0.0% | 0.0x | $439M | VS | |
$ISSC INNOVATIVE SOLUTIONS & SUPPORT INC | 73 | 81 | 88 | 94 | 25.0x | 14.1x | 28.1% | 16.8% | 48.1% | 23.8% | 18.5% | 78.6% | 0.0% | 37.0x | $220M | VS | |
$AER AerCap Holdings N.V. | 72 | 60 | 87 | 84 | - | - | 12.4% | 2.9% | 100.0% | 28.2% | 26.2% | 5.5% | 0.8% | 264.0x | $19.4B | VS | |
$HCSG HEALTHCARE SERVICES GROUP INC | 72 | 74 | 88 | 88 | 7.1x | 6.1x | 28.9% | 20.8% | 20.8% | 9.9% | 9.3% | 8.5% | 0.0% | 1.0x | $1.2B | VS | |
$LQDT LIQUIDITY SERVICES INC | 72 | 90 | 88 | 68 | 24.9x | 14.3x | 14.6% | 7.8% | 43.8% | 7.4% | 5.9% | 31.2% | 0.0% | 0.0x | $857M | VS | |
$TRTNpA Triton International Ltd | 71 | 70 | 89 | 70 | - | 1.7x | 18.0% | 4.6% | 97.3% | 52.2% | 32.7% | -3.4% | 0.0% | 271.0x | $8.0B | VS | |
$EDU New Oriental Education & Technology Group Inc. | 71 | 83 | 52 | 77 | - | - | 9.4% | 4.9% | 55.5% | 8.7% | 7.7% | 13.6% | 1.3% | 7.0x | $78.0B | VS | |
$NTES NetEase, Inc. | 71 | 88 | 93 | 68 | - | - | 22.1% | 15.6% | 62.5% | 28.1% | 28.7% | -1.0% | 2.8% | 9.0x | $56.6B | VS | |
$UTI UNIVERSAL TECHNICAL INSTITUTE INC | 70 | 86 | 86 | 72 | 43.2x | 16.0x | 21.4% | 8.0% | 100.0% | 10.0% | 7.5% | 14.1% | 0.0% | 27.0x | $1.8B | VS | |
$MGIC MAGIC SOFTWARE ENTERPRISES LTD | 68 | 85 | 96 | 77 | 23.2x | 2.1x | 62.5% | 32.0% | 28.4% | 16.4% | 7.8% | 2.9% | 3.8% | 29.0x | $576M | ||
| SECTOR BENCH | - | - | - | - | - | 23.7x | 11.7x | 5.3% | 1.9% | 59.6% | 3.5% | 2.3% | 7.8% | 0.0% | 0.3x | - | REF |
MAGIC SOFTWARE ENTERPRISES LTD (MGIC) receives a "Buy" rating with a composite score of 67.8/100. It ranks #163 out of 7,333 stocks in our coverage universe and carries a 4-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
Sign in to join the discussion.
YOY expansion rate
Core pricing power
Operating efficiency
Bottom-line conversion
Equity capital efficiency
Asset base utilization
Financial leverage load
Direct cash return
Guy S. Bernstein
Chief Executive Officer
Labor Force
3,680
85
50
62
Audit Verdict: Average governance indicators based on financial metrics.
No recent insider transactions available for MGIC
Headcount
3.7K
HQ Base
OR YEHUDA ISRAEL,
Outperforming peers — winners tend to keep winning over 3-12 months
Trading at a discount to fundamentals — favorable entry valuation
High profitability & efficiency — strong quality floor supports entry
Low volatility — smoother ride and historically better risk-adjusted returns
Moderate investment profile
Top-rated overall — multiple factors aligned for strong entry
Get full access to institutional-quality research tools with Blank Capital Pro.
Upgrade to ProStarting at $19.99/mo
Relative valuation derived from Services sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for MGIC.
View All RatingsConservative accounting — High cash conversion efficiency
Improving capital utilization rates confirmed
| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 85 | 98 | -13DRAG |
| MOMENTUM | 77 | 86 | -9DRAG |
| VALUATION | 96 | 99 | -3NEUTRAL |
| INVESTMENT | 50 | 86 | -36DRAG |
| STABILITY | 62 | 67 | -5NEUTRAL |
| SHORT INT | 54 | 65 | -11DRAG |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROE proxy 62.5% (sector 5.3%)
GM 28% vs sector 60%, OM 16% vs sector 4%
Capital turnover N/A, R&D intensity 2.4%
Rev growth 3%, 9yr history
Interest coverage N/A, Net debt/EBITDA -0.3x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
MAGIC SOFTWARE ENTERPRISES LTD receives a Buy rating with a composite score of 67.8/100 and 4 out of 5 stars, ranking #163 of 7,333 stocks in our universe. MGIC displays a favorable combination of factors that positions it above the majority of the market. While not without risk, the quantitative profile supports a constructive outlook.
MAGIC SOFTWARE ENTERPRISES LTD scores an outstanding 85/100 on our quality factor, placing it among the highest-quality companies in our coverage universe. The company reports a return on equity of 62.5% (sector avg: 5.3%), gross margins of 28.4% (sector avg: 59.6%), net margins of 7.8% (sector avg: 2.3%). This level of profitability and capital efficiency typically reflects a durable competitive advantage and disciplined management.
From a valuation perspective, MGIC scores an exceptional 96/100, indicating the stock trades at a deep discount relative to its fundamentals. Key valuation metrics include a P/E ratio of 23.17x, an EV/EBITDA of 2.06x, a P/B ratio of 3.44x. A value score this high suggests the market may be significantly underpricing the company's earnings power, assets, or cash flow generation.
With an investment score of 50/100, MGIC exhibits moderate growth-oriented spending. Key growth metrics include revenue growth of 2.9% vs. a sector average of 7.8% and a return on assets of 32.0% (sector: 1.9%). The company appears to be balancing growth investments with capital returns, though the pace of investment may not be enough to accelerate top-line growth meaningfully.
MGIC shows strong momentum characteristics with a score of 77/100. The stock has been trending above key moving averages, indicating solid demand from institutional buyers. Revenue growth stands at 2.9% year-over-year, while a beta of 0.75 reflects its sensitivity to broader market moves. This level of momentum typically signals sustained investor confidence and favorable near-term price action.
With a stability score of 62/100, MGIC exhibits average financial resilience. Key stability metrics include a beta of 0.75 and a debt-to-equity ratio of 29.00x (sector avg: 0.3x). While the balance sheet is not a major concern, the stock is subject to typical market volatility and may experience sharper drawdowns during risk-off episodes.
The short interest score of 54/100 for MGIC suggests somewhat elevated bearish positioning by institutional traders. Specific risk factors include elevated leverage (D/E: 29.00x), small-cap liquidity risk. With a $576M market cap (small-cap), MAGIC SOFTWARE ENTERPRISES LTD may experience above-average volatility. Investors should consider whether the short thesis has merit or if it creates a potential short-squeeze opportunity.
MGIC pays a solid dividend yield of 3.8%, contributing an income component to total returns. This moderate yield suggests a balance between returning capital to shareholders and retaining earnings for reinvestment — a common profile among quality compounders.
MAGIC SOFTWARE ENTERPRISES LTD is a small-cap company in the Services sector, ranked #17 of 50 in its sector (66th percentile) and #163 of 7,333 overall (98th percentile). Key comparisons include ROE of 62.5% exceeding the 5.3% sector median and operating margins of 16.4% above the 3.5% sector average. This above-median position indicates MGIC is outperforming a majority of its Services peers, though there is room to close the gap with sector leaders.
Quant Factor Profile
Key factor gap
Value (96) vs Investment (50) — closing this gap could shift the rating.
RANK #17 OF 50 IN CONSUMER DISCRETIONARY
EV/EBITDA 82% BELOW SECTOR MEDIAN (FAVORABLE)
ROE 1076% ABOVE SECTOR MEDIAN (FAVORABLE)
Gross Margin 52% BELOW SECTOR MEDIAN
AUDIT DATA AS OF DEC 31, 2024 (Q3 FY2024)
We rate MAGIC SOFTWARE ENTERPRISES LTD (MGIC) as a Buy with a composite score of 67.8/100 at a current price of $17.35. The stock scores above average across the majority of our six quantitative factors and ranks #163 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.
The rating is primarily driven by strength in value (96th percentile) and quality (85th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (41/100), Low uncertainty, and Exemplary capital allocation.
Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.
MAGIC SOFTWARE ENTERPRISES LTD holds an above-average position (#17 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 67.8/100 places it at rank #163 in our full 7,333-stock universe. At $576M in market capitalization, MAGIC SOFTWARE ENTERPRISES LTD is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.
The outlook is moderately positive, with revenue expanding at 3% and favorable momentum (77th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.
The margin cascade tells an important story: gross margins of 28% (-31.2pp vs sector) narrow to operating margins of 16% (+12.9pp vs sector) and net margins of 7.8%, yielding a gross-to-net conversion rate of 27%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.
At a current price of $17.35, MAGIC SOFTWARE ENTERPRISES LTD appears undervalued relative to its fundamentals. Our value factor score of 96/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.
The stock currently trades at a P/E of 23.2x (roughly in line with the sector median of 23.7x), EV/EBITDA of 2.1x (discounted to peers), P/B of 3.4x, P/S of 0.4x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.
The stock's Buy rating (composite score 67.8/100) reflects broad-based quantitative strength, placing it in the top 20% of our 7,333-stock universe.
Returns on equity of 62.5% exceed the cost of equity for most companies, indicating genuine shareholder value creation and a reinvestment engine that compounds wealth over time.
A value factor score of 96/100 suggests the market is underpricing these fundamentals, creating a potential margin of safety for new investors.
A conservative balance sheet (29% D/E) provides financial flexibility for acquisitions, buybacks, or weathering economic downturns without dilution.
Positive momentum (77th percentile) indicates institutional accumulation and favorable technical dynamics that tend to persist in the intermediate term.
We assign a Low uncertainty rating to MAGIC SOFTWARE ENTERPRISES LTD. The company exhibits strong financial stability with a beta of 0.75, conservative leverage (29% D/E), and a stability factor in the 62th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.
We identify no major risk factors at this time. The company's stability factor sits at the 62th percentile with quality at the 85th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.
Key risk mitigants include: conservative leverage (29% D/E) limits balance sheet risk; above-average stability (62th percentile) suggests predictable business dynamics; a 3.75% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.
We rate MAGIC SOFTWARE ENTERPRISES LTD's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 62.5%, disciplined leverage (29% D/E), a 3.75% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — MAGIC SOFTWARE ENTERPRISES LTD meets this high bar.
The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 3.75% dividend yield, and the combination of 32.0% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.
In summary, MAGIC SOFTWARE ENTERPRISES LTD receives a Buy rating with a composite score of 67.8/100 (rank #163 of 7,333). Our quantitative framework assigns a Narrow Moat (41/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 74/100.
Our analysis supports a constructive view on MAGIC SOFTWARE ENTERPRISES LTD. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We assign MAGIC SOFTWARE ENTERPRISES LTD a Narrow Moat rating with a composite moat score of 41/100. The company possesses identifiable competitive advantages, though they are less entrenched than those of wide-moat peers. Our analysis indicates that MAGIC SOFTWARE ENTERPRISES LTD can sustain above-average returns on invested capital for at least 10 years, with the strongest contributor being economic value creation at 15/20.
The strongest moat sources are economic value creation (15/20) and financial resilience (10/20). ROE proxy 62.5% (sector 5.3%). Interest coverage N/A, Net debt/EBITDA -0.3x. These pillars form the core of MAGIC SOFTWARE ENTERPRISES LTD's competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include reinvestment efficiency (0.8/20) and margin superiority (6.4/20). Capital turnover N/A, R&D intensity 2.4%. Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect MAGIC SOFTWARE ENTERPRISES LTD's moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.
Key profit drivers include operating margins of 16% reflecting effective cost management, returns on equity of 62.5% driving shareholder value creation. The margin cascade from 28% gross to 16% operating to 7.8% net reveals the company's cost structure and reinvestment intensity. Our analysis indicates that the profit engine is high-quality and likely sustainable, with the quality factor at the 85th percentile.
The margin profile shows gross margins of 28%, operating margins of 16%, net margins of 7.8%. Return metrics include ROE of 62.5% and ROA of 32.0%. Relative to the Services sector, gross margins are 31.2 percentage points below the sector median of 60%, and ROE of 62.5% compares to a sector median of 5.3%.
The balance sheet reflects a conservatively managed balance sheet with D/E of 29%, a dividend yield of 3.75%, revenue growth of 3%. The sector median D/E is 0%, putting MAGIC SOFTWARE ENTERPRISES LTD at higher leverage than the typical peer. Overall balance sheet health is adequate for the current business environment.
Even high-quality stocks face risks from valuation compression, competitive disruption, or macro shocks that are difficult to quantify in advance.
Above 50MA
37.18%
Net New Highs
+51081
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
Magic Software Enterprises Ltd. (NASDAQ:MGIC) is one of the best-performing small-cap tech stocks in the past three years. On November 18, the company posted record Q3 revenue of $161.7 million, up 13.1% year-over-year, powered by demand across its IT consulting and enterprise software services. Despite a stable gross margin at 27.3%, the company tightened the […]
Magic Software Enterprises reported strong financial results for the fourth quarter and full year 2024, with revenue growth and improved profitability. The company also announced a strategic merger with Matrix I.T, Israel's leading IT services company.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
The heavy selling pressure might have exhausted for Magic Software (MGIC) as it is technically in oversold territory now. In addition to this technical measure, strong agreement among Wall Street analysts in revising earnings estimates higher indicates that the stock is ripe for a trend reversal.