Analyzing Magic Software Enterprises (MGIC) and Callidus Software (NASDAQ:CALD)

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Magic Software Enterprises and Callidus Software, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magic Software Enterprises 0 1 3 0 2.75
Callidus Software 0 1 7 0 2.88

Magic Software Enterprises presently has a consensus price target of $10.00, suggesting a potential upside of 21.21%. Callidus Software has a consensus price target of $23.79, suggesting a potential upside of 1.22%. Given Magic Software Enterprises’ higher possible upside, equities research analysts plainly believe Magic Software Enterprises is more favorable than Callidus Software.

Insider & Institutional Ownership

10.2% of Magic Software Enterprises shares are held by institutional investors. Comparatively, 99.8% of Callidus Software shares are held by institutional investors. 4.5% of Magic Software Enterprises shares are held by company insiders. Comparatively, 1.6% of Callidus Software 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.

Earnings and Valuation

This table compares Magic Software Enterprises and Callidus Software’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Magic Software Enterprises $217.74 million 1.67 $35.20 million $0.28 29.46
Callidus Software $216.48 million 7.04 -$7.66 million ($0.36) -65.28

Magic Software Enterprises has higher revenue and earnings than Callidus Software. Callidus Software 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.

Volatility & Risk

Magic Software Enterprises has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Callidus Software has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Dividends

Magic Software Enterprises pays an annual dividend of $0.17 per share and has a dividend yield of 2.1%. Callidus Software does not pay a dividend. Magic Software Enterprises pays out 60.7% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Magic Software Enterprises 5.73% 10.22% 6.88%
Callidus Software -9.85% -6.77% -4.00%

Summary

Magic Software Enterprises beats Callidus Software on 9 of the 15 factors compared between the two stocks.

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.

About Callidus Software

Callidus Software Inc. (Callidus) is a provider of cloud-based sales, marketing, learning and customer experience solutions. The Company’s CallidusCloud enables its customers to manage their Lead to Money process with a suite of solutions that identify leads, implement territory and quota plans, enable sales forces, automate bid configuration pricing and quoting, manage contracts, streamline sales compensation and capture customer feedback, among others. Lead to Money is a process designed to help companies respond to the changing role of sales and marketing in the redefined buying cycle. The company’s Lead to Money suite and technology solutions include Lead, Planning, Enablement, Quotes and Proposals, Contracts, Incentives, Customer Experience and Technology. The Company provides a range of services to its customers, which include professional services, business process outsourcing services, maintenance and technical support services, and education services.

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