Analyzing GoDaddy (NYSE:GDDY) and Formula Systems (1985) (NASDAQ:FORTY)

Formula Systems (1985) (NASDAQ:FORTY) and GoDaddy (NYSE:GDDY) are both technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Insider & Institutional Ownership

34.8% of Formula Systems (1985) shares are held by institutional investors. Comparatively, 90.3% of GoDaddy shares are held by institutional investors. 23.3% of Formula Systems (1985) shares are held by insiders. Comparatively, 0.9% of GoDaddy shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Formula Systems (1985) and GoDaddy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Formula Systems (1985)	21.57%	4.38%	2.13%
GoDaddy	17.83%	660.96%	11.32%

Volatility and Risk

Formula Systems (1985) has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, GoDaddy has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Formula Systems (1985) and GoDaddy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Formula Systems (1985)	0	1	0	0	2.00
GoDaddy	1	9	9	0	2.42

GoDaddy has a consensus price target of $110.38, indicating a potential upside of 7.06%. Given GoDaddy’s stronger consensus rating and higher possible upside, analysts clearly believe GoDaddy is more favorable than Formula Systems (1985).

Earnings & Valuation

This table compares Formula Systems (1985) and GoDaddy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Formula Systems (1985)	$2.93 billion	0.58	$606.48 million	$39.83	2.80
GoDaddy	$4.95 billion	2.64	$875.00 million	$6.74	15.30

GoDaddy has higher revenue and earnings than Formula Systems (1985). Formula Systems (1985) is trading at a lower price-to-earnings ratio than GoDaddy, indicating that it is currently the more affordable of the two stocks.

Summary

GoDaddy beats Formula Systems (1985) on 10 of the 14 factors compared between the two stocks.

About Formula Systems (1985)

Formula Systems (1985) Ltd., through its subsidiaries, provides proprietary and non-proprietary software solutions, IT professional services, software product marketing and support, computer infrastructure and integration solutions, and learning and integration worldwide. The company offers computer and telecommunication infrastructure solutions; and sells and markets computers and peripheral equipment, and cloud based solutions and services relating to databases and big data. It also provides customer relations management, computer systems management infrastructures, web world content management, database and data warehouse mining, application integration, database and systems, data management, and software development tools; and application and professional training courses, and advanced professional studies. In addition, the company offers property and casualty insurance platforms, such as Sapiens, Sapiens CoreSuite, Sapiens IDITSuite, and IDIT Go; life, pension, and annuities platforms, including Sapiens, Sapiens CoreSuite, Sapiens UnderwritingPro, Sapiens ApplicationPro, Sapiens IllustrationPro, and Sapiens ConsolidationMaster; Sapiens Cloud-based DigitalSuite; data and analytics platform; and reinsurance software solutions comprising Sapiens ReinsuranceMaster, Sapiens ReinsurancePro, and Sapiens Reinsurance GO. Further, it provides Sapiens workers' compensation solutions; Sapiens medical professional liability solutions; financial and compliance solutions, such as Sapiens FinancialPro, Sapiens Financial GO, Sapiens StatementPro, Sapiens CheckPro, and Sapiens Reporting Tools; Sapiens Decision; and technology-based solutions. Additionally, it offers application development and business process integration platforms; vertical software solutions; strategic consulting and outsourcing services; and professional services in various areas, as well as develops on-premise payroll software. The company was incorporated in 1985 and is headquartered in Or Yehuda, Israel.

About GoDaddy

GoDaddy Inc. engages in the design and development of cloud-based products in the United States and internationally. It operates through two segments: Applications and Commerce, and Core Platform. The Applications and Commerce segment provides applications products, including Websites + Marketing, a mobile-optimized online tool that enables customers to build websites and e-commerce enabled online stores; and Managed WordPress, a streamlined and optimized website building that allows customers to easily build and manage a faster WordPress site; Managed WooCommerce Stores to sell anything and anywhere online; and marketing tools and services, such as GoDaddy Studio mobile application, search engine optimization, Meta and Google My Business, and email and social media marketing designed to help businesses acquire and engage customers and create content. The segment also offers connected commerce comprising Smart Terminal, a dual screen all-in-one Point-of-Sale system that allows customers to manage in-store inventory and product catalogs and take payments; GoDaddy Payments, a payment facilitator that enables customers to accept all major forms of payments; and email service plans with a multi-feature web interface, and Microsoft Office 365 accounts that connects to customers’ domains. The Core Platform segment offers domain products, including primary registrations, domain aftermarket platform, and domain name add-ons, as well as GoDaddy Registry, a provider of domain name registry services; and hosting and security services comprising shared website hosting, virtual private servers, and managed wordpress hosting services, as well as security products with a comprehensive suite of tools designed to help secure customers’ online presence. The company serves small businesses, individuals, organizations, developers, designers, and domain investors. GoDaddy Inc. was founded in 1997 and is headquartered in Tempe, Arizona.