Magic Software Enterprises (NASDAQ:MGIC – Get Free Report) and Rand Worldwide (OTCMKTS:RWWI – Get Free Report) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.
Profitability
This table compares Magic Software Enterprises and Rand Worldwide’s 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% |
| Rand Worldwide | 27.20% | 70.93% | 26.54% |
Institutional and Insider Ownership
24.7% of Magic Software Enterprises shares are owned by institutional investors. Comparatively, 0.0% of Rand Worldwide shares are owned by institutional investors. 4.5% of Magic Software Enterprises shares are owned by company insiders. Comparatively, 59.2% of Rand Worldwide shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Magic Software Enterprises | 0 | 2 | 1 | 0 | 2.33 |
| Rand Worldwide | 0 | 0 | 0 | 0 | 0.00 |
Magic Software Enterprises presently has a consensus price target of $18.00, suggesting a potential upside of 3.57%. Given Magic Software Enterprises’ stronger consensus rating and higher probable upside, analysts plainly believe Magic Software Enterprises is more favorable than Rand Worldwide.
Earnings & Valuation
This table compares Magic Software Enterprises and Rand Worldwide”s top-line revenue, earnings per share 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 |
| Rand Worldwide | $178.84 million | 2.63 | $46.59 million | $1.16 | 12.08 |
Rand Worldwide has lower revenue, but higher earnings than Magic Software Enterprises. Rand Worldwide 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.
Dividends
Magic Software Enterprises pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Rand Worldwide pays an annual dividend of $0.25 per share and has a dividend yield of 1.8%. Magic Software Enterprises pays out 74.1% of its earnings in the form of a dividend. Rand Worldwide pays out 21.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Magic Software Enterprises has increased its dividend for 1 consecutive years. Magic Software Enterprises is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Magic Software Enterprises has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, Rand Worldwide has a beta of 0.09, suggesting that its stock price is 91% less volatile than the S&P 500.
Summary
Magic Software Enterprises beats Rand Worldwide on 9 of the 17 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 Rand Worldwide
Rand Worldwide, Inc. provides design automation and data management solutions primarily in the United States and Canada. It operates in five divisions: IMAGINiT Technologies, Rand Simulation, Facilities Management, ASCENT, and Rand 3D. The IMAGINiT Technologies division resells Autodesk solutions and system integration, and consulting services to customers in the manufacturing, infrastructure, building, and media and entertainment industries; resells Twinmotion visualization software, which provides design professionals to transform architectural models and designs into photorealistic images and immersive videos; offers a range of 3D laser scanning equipment and related software to help architectural, engineering, and construction firms; and sells its own proprietary software products and related services. The Rand Simulation division offers Ansys engineering simulation software to help organizations incorporate engineering simulation technology into the product development process; and provides simulation consulting services to enable organizations to achieve cost savings and design improvements through simulation technology. The Facilities Management division provides ARCHIBUS products for facilities management software for space planning, strategic planning, and lease/property administration; and offers various training, consulting, and support services for the ARCHIBUS products. The ASCENT division provides professional training materials and knowledge products for engineering software tools. The Rand 3D division offers training solutions for Dassault Systèmes and PTC products, including Pro/ENGINEER, CREO, and Windchill. Rand Worldwide, Inc. is based in Baltimore, Maryland.
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