Comparing Amber Road (NYSE:AMBR) and Magic Software Enterprises (MGIC)

Amber Road (NYSE: AMBR) and Magic Software Enterprises (NASDAQ:MGIC) are both small-cap technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, dividends, earnings, profitability, valuation, institutional ownership and risk.

Volatility & Risk

Amber Road has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Institutional and Insider Ownership

72.6% of Amber Road shares are held by institutional investors. Comparatively, 9.3% of Magic Software Enterprises shares are held by institutional investors. 13.1% of Amber Road shares are held by insiders. Comparatively, 4.5% of Magic Software Enterprises shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Amber Road -20.19% -53.22% -14.53%
Magic Software Enterprises 4.77% 10.37% 6.30%

Dividends

Magic Software Enterprises pays an annual dividend of $0.26 per share and has a dividend yield of 2.9%. Amber Road does not pay a dividend. Magic Software Enterprises pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings for Amber Road and Magic Software Enterprises, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Amber Road 0 0 3 0 3.00
Magic Software Enterprises 0 0 3 0 3.00

Amber Road presently has a consensus target price of $12.00, suggesting a potential upside of 62.60%. Magic Software Enterprises has a consensus target price of $10.17, suggesting a potential upside of 15.01%. Given Amber Road’s higher possible upside, equities analysts plainly believe Amber Road is more favorable than Magic Software Enterprises.

Earnings and Valuation

This table compares Amber Road and Magic Software Enterprises’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Amber Road $73.16 million 2.74 -$18.72 million ($0.57) -12.95
Magic Software Enterprises $201.65 million 1.95 $11.90 million $0.26 34.00

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

Summary

Magic Software Enterprises beats Amber Road on 8 of the 14 factors compared between the two stocks.

About Amber Road

Amber Road, Inc. is a provider of cloud-based global trade management (GTM) solutions. The Company’s GTM solutions include modules for logistics contract and rate management, supply chain visibility and event management, international trade compliance, and Global Knowledge trade content database to importers and exporters, non-vessel owning common carriers (resellers), and ocean carriers. The Company delivers its GTM solution using a software-as-a-service (SaaS) model. The Company’s solution automates the global supply chain across sourcing, logistics, cross-border trade and regulatory compliance activities. The Company’s GTM solution combines enterprise-class software, trade content sourced from government agencies and transportation providers in approximately 145 countries, and a global supply chain network connecting its customers with the trading partners, including suppliers, freight forwarders, customs brokers and transportation carriers.

About Magic Software Enterprises

Magic Software Enterprises Ltd. is a provider of application development, business process integration platforms, vertical software solutions and related professional services. The Company is a vendor of information technology (IT) outsourcing services. Its software technology is used by customers to develop, deploy and integrate on premise, mobile and cloud-based business. It operates through two segments: software solutions and IT professional services. The software services segment includes software technology and complementary services. The IT professional services segment offers IT services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, and communications services and solutions. Its product portfolio includes Magic xpa Application Platform, AppBuilder Application Platform and Magic xpi Integration Platform. Its vertical software packages include Leap, Hermes Solution, HR Pulse and MBS Solution.

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