Synopsys (NASDAQ:SNPS) and Magic Software Enterprises (NASDAQ:MGIC) Head to Head Contrast

Magic Software Enterprises (NASDAQ:MGIC) and Synopsys (NASDAQ:SNPS) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, earnings, profitability, risk and dividends.

Analyst Recommendations

This is a summary of recent ratings and target prices for Magic Software Enterprises and Synopsys, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Magic Software Enterprises	0	2	1	0	2.33
Synopsys	1	8	8	0	2.41

Magic Software Enterprises presently has a consensus price target of $18.00, indicating a potential upside of 3.57%. Synopsys has a consensus price target of $531.00, indicating a potential upside of 39.56%. Given Synopsys’ stronger consensus rating and higher possible upside, analysts plainly believe Synopsys is more favorable than Magic Software Enterprises.

Volatility & Risk

Magic Software Enterprises has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, Synopsys has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500.

Profitability

This table compares Magic Software Enterprises and Synopsys’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Magic Software Enterprises	6.61%	16.28%	8.96%
Synopsys	13.76%	6.83%	3.93%

Valuation & Earnings

This table compares Magic Software Enterprises and Synopsys”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Magic Software Enterprises	$603.22 million	1.41	$36.88 million	$0.81	21.46
Synopsys	$7.05 billion	10.33	$1.33 billion	$6.44	59.08

Synopsys has higher revenue and earnings than Magic Software Enterprises. Magic Software Enterprises is trading at a lower price-to-earnings ratio than Synopsys, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

24.7% of Magic Software Enterprises shares are held by institutional investors. Comparatively, 85.5% of Synopsys shares are held by institutional investors. 4.5% of Magic Software Enterprises shares are held by company insiders. Comparatively, 0.6% of Synopsys shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Synopsys beats Magic Software Enterprises on 11 of the 14 factors compared between the two stocks.

About Magic Software Enterprises

Magic Software Enterprises Ltd. provides proprietary application development, vertical software solutions, business process integration, information technologies (IT) outsourcing software services, and cloud-based services in Israel and internationally. Its Software Services segment develops, markets, sells, and supports application platform, software applications, and business and process integration solutions and related services. The company’s 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. It also offers proprietary application platforms, such as Magic xpa for developing and deploying business applications; AppBuilder for building, deploying, and maintaining business applications; Magic xpi for application integration; Magic xpi cloud native; FactoryEye for virtualization of production data; Magic Data Management and Analytics Platform for data management; and Magic SmartUX for cross-platform mobile business applications. The company also provides vertical software solutions comprising Clicks, a software solution for healthcare providers; Leap, a software solution for business support systems; Hermes Cargo, a packaged software solution for managing air cargo ground handling; HR Pulse, a single-tenant software as a service tool; MBS Solution, a system for managing TV broadcast management; Nativ, a system for management of rehabilitation centers; and Mobisale, a system for sales and distribution field activities for consumer goods manufacturers and wholesalers. In addition, It provides software maintenance, support, training, and consulting services. The company was formerly known as Mashov Software Export (1983) Ltd. and changed its name to Magic Software Enterprises Ltd. in 1991. The company was incorporated in 1983 and is headquartered in Or Yehuda, Israel.

About Synopsys

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. It operates in three segments: Design Automation, Design IP, and Software Integrity. The company offers Digital and Custom IC Design solution that provides digital design implementation solutions; Verification solution that offers virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy applications; logic libraries and embedded memories; processor cores, software, and application-specific instruction-set processor tools for embedded applications; security IP solutions; IP solutions for automotive market; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers HAPS FPGA-based prototyping systems; virtual prototyping solutions; and Platform Architect solutions for SoC architecture analysis and optimization, as well as optical products, and mechatronic simulations. Further, it provides security and quality testing products, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. Additionally, the company provides intelligent orchestration solution, software risk manager, and black duck software composition analysis tools. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Sunnyvale, California.