Comparing Simulations Plus (NASDAQ:SLP) & Magic Software Enterprises (NASDAQ:MGIC)

Simulations Plus (NASDAQ:SLP) and Magic Software Enterprises (NASDAQ:MGIC) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Simulations Plus and Magic Software Enterprises, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simulations Plus	1	6	2	0	2.11
Magic Software Enterprises	0	2	1	0	2.33

Simulations Plus currently has a consensus target price of $21.50, indicating a potential upside of 31.74%. Magic Software Enterprises has a consensus target price of $18.00, indicating a potential upside of 3.57%. Given Simulations Plus’ higher probable upside, research analysts plainly believe Simulations Plus is more favorable than Magic Software Enterprises.

Institutional and Insider Ownership

78.1% of Simulations Plus shares are held by institutional investors. Comparatively, 24.7% of Magic Software Enterprises shares are held by institutional investors. 19.1% of Simulations Plus shares are held by company insiders. Comparatively, 4.5% of Magic Software Enterprises shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Simulations Plus has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Simulations Plus	-77.96%	16.21%	15.00%
Magic Software Enterprises	6.61%	16.28%	8.96%

Earnings and Valuation

This table compares Simulations Plus and Magic Software Enterprises”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simulations Plus	$79.18 million	4.16	-$64.72 million	($3.13)	-5.21
Magic Software Enterprises	$603.22 million	1.41	$36.88 million	$0.81	21.46

Magic Software Enterprises has higher revenue and earnings than Simulations Plus. Simulations Plus 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.

About Simulations Plus

Simulations Plus, Inc. develops drug discovery and development software for modeling and simulation, and prediction of molecular properties utilizing artificial intelligence and machine learning based technology worldwide. The company operates through two segments, Software and Services. It offers GastroPlus, which simulates the absorption and drug interaction of compounds administered to humans and animals; and DDDPlus and MembranePlus simulation products. The company also provides products based on mechanistic and mathematical models, such as DILIsym, NAFLDsym, ILDsym, RENAsym, IPFsym, and MITOsym products. In addition, it offers Absorption, Distribution, Metabolism, Excretion, and Toxicity Predictor for chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, as well as MonolixSuite products for modeling and simulation that allows for population analyses, rapid clinical trial data analyses, and regulatory submissions. Further, the company provides clinical-pharmacology-based consulting services, which includes population pharmacokinetic and pharmacodynamic modeling, exposure-response analyses, clinical trial simulations, data programming, and technical writing services in support of regulatory submissions; and early drug discovery services. Additionally, it offers creative and insightful consulting services to support its quantitative systems pharmacology/quantitative systems toxicology modelling. The company serves pharmaceutical, biotechnology, agrochemical, cosmetics, and food industry companies, as well as academic and regulatory agencies. Simulations Plus, Inc. was incorporated in 1996 and is headquartered in Lancaster, California.

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.