Formula Systems (1985) Ltd (FORTY, Financial) has recently experienced a notable surge in its stock price, with a 7.78% gain over the past week and an impressive 19.37% increase over the last three months. As of the latest data, the company boasts a market capitalization of $1.32 billion. According to GuruFocus, the stock is currently modestly undervalued with a GF Value of $103.01, showing a positive shift from being significantly undervalued three months ago when the GF Value was $98.89.
Overview of Formula Systems (1985) Ltd
Formula Systems (1985) Ltd operates within the software industry, primarily serving as a holding company. Through its subsidiaries, it offers a range of IT services, including software development and expansion. The company's business is segmented into Matrix, Sapiens, and Magic Software, each focusing on different service areas such as software for the insurance industry and vendor management systems. The majority of Formula Systems' revenue is generated in Israel, indicating a strong presence in its domestic market. 
Assessing Formula Systems' Profitability
Formula Systems holds a strong Profitability Rank of 8/10, reflecting its robust financial health. The company's operating margin stands at 9.13%, which is higher than 68.65% of its peers in the industry. Additionally, its Return on Equity (ROE) and Return on Assets (ROA) are 11.03% and 2.33% respectively, both surpassing the majority of its competitors. The Return on Invested Capital (ROIC) is also commendable at 8.95%. These metrics not only highlight the company's efficient operational management but also its ability to generate profits relative to its equity, assets, and invested capital. 
Growth Trajectory of Formula Systems
The company's Growth Rank is also impressive at 8/10. Over the past three years, Formula Systems has achieved a revenue growth rate per share of 14.40%, and over five years, the rate is 13.90%. These figures are higher than 63.94% and 70.53% of companies in the same industry, respectively. The 3-Year EPS without NRI Growth Rate stands at 6.50%, and the 5-Year EPS Growth Rate is an exceptional 28.70%, indicating strong earnings growth over time. 
Comparative Analysis with Competitors
When compared to its closest competitors, Formula Systems holds a competitive edge. Hilan Ltd (XTAE:HLAN, Financial) has a slightly higher market cap at $1.36 billion, while Nayax Ltd (XTAE:NYAX, Financial) and Magic Software Enterprises Ltd (XTAE:MGIC, Financial) have market caps of $1.06 billion and $622.956 million, respectively. This positioning reflects Formula Systems' strong market presence and financial stability relative to its peers.
Conclusion
Formula Systems (1985) Ltd has demonstrated a robust financial performance and growth trajectory, making it a noteworthy contender in the software industry. The company's recent stock price rally is backed by its strong profitability metrics and growth rates, which surpass many of its industry peers. With its current valuation indicating that it is modestly undervalued, Formula Systems presents a potentially attractive opportunity for investors looking for stable yet growing tech investments.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
