Analyzing Nuance Communications (NUAN) and Magic Software Enterprises (MGIC)
Nuance Communications (NASDAQ: NUAN) and Magic Software Enterprises (NASDAQ:MGIC) are both computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.
Magic Software Enterprises pays an annual dividend of $0.26 per share and has a dividend yield of 3.1%. Nuance Communications does not pay a dividend. Magic Software Enterprises pays out 96.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares Nuance Communications and Magic Software Enterprises’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Magic Software Enterprises||5.08%||10.49%||6.58%|
Earnings & Valuation
This table compares Nuance Communications and Magic Software Enterprises’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Nuance Communications||$1.98 billion||2.37||$406.34 million||($0.24)||-67.87|
|Magic Software Enterprises||$235.86 million||1.60||$36.98 million||$0.27||31.48|
Nuance Communications has higher revenue and earnings than Magic Software Enterprises. Nuance Communications 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.
This is a summary of recent ratings for Nuance Communications and Magic Software Enterprises, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Magic Software Enterprises||0||1||4||0||2.80|
Nuance Communications presently has a consensus price target of $21.00, indicating a potential upside of 28.91%. Magic Software Enterprises has a consensus price target of $10.00, indicating a potential upside of 17.65%. Given Nuance Communications’ stronger consensus rating and higher probable upside, analysts plainly believe Nuance Communications is more favorable than Magic Software Enterprises.
Volatility & Risk
Nuance Communications has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.
Insider & Institutional Ownership
84.3% of Nuance Communications shares are held by institutional investors. Comparatively, 9.0% of Magic Software Enterprises shares are held by institutional investors. 1.7% of Nuance Communications 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 hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Nuance Communications beats Magic Software Enterprises on 11 of the 17 factors compared between the two stocks.
About Nuance Communications
Nuance Communications, Inc. is a provider of voice recognition and natural language understanding solutions. The Company’s segments include Healthcare, Mobile, Enterprise and Imaging. The Healthcare segment provides clinical speech and clinical language understanding solutions. The solutions for the Healthcare segment include transcription solutions, Dragon Medical, and clinical document improvement (CDI) and coding solutions. Its Mobile segment provides a portfolio of specialized virtual assistants and connected services. The Enterprise segment provides automated customer solutions and services. The solutions for the Enterprise segment include On-Premise solutions and services, and On-Demand multichannel cloud. The Imaging segment provides software solutions that help professionals and organizations to gain control of their document and information processes. Imaging segment include multi-function printer (MFP) scan automation solutions and MFP Print automation solutions.
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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