Financial Contrast: Formula Systems (1985) (NASDAQ:FORTY) vs. Shopify (NASDAQ:SHOP)

Formula Systems (1985) (NASDAQ:FORTY) and Shopify (NASDAQ:SHOP) are both technology companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, earnings and profitability.

Insider and Institutional Ownership

34.8% of Formula Systems (1985) shares are owned by institutional investors. Comparatively, 69.3% of Shopify shares are owned by institutional investors. 23.3% of Formula Systems (1985) shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Formula Systems (1985) and Shopify’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Formula Systems (1985)	21.57%	4.38%	2.13%
Shopify	14.53%	12.58%	10.94%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Formula Systems (1985) and Shopify, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Formula Systems (1985)	0	1	0	0	2.00
Shopify	0	10	36	2	2.83

Shopify has a consensus price target of $172.00, suggesting a potential upside of 15.13%. Given Shopify’s stronger consensus rating and higher probable upside, analysts clearly believe Shopify is more favorable than Formula Systems (1985).

Valuation & Earnings

This table compares Formula Systems (1985) and Shopify”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Formula Systems (1985)	$2.93 billion	0.59	$606.48 million	$39.83	2.85
Shopify	$11.56 billion	16.63	$1.23 billion	$1.48	100.95

Shopify has higher revenue and earnings than Formula Systems (1985). Formula Systems (1985) is trading at a lower price-to-earnings ratio than Shopify, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Formula Systems (1985) has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500. Comparatively, Shopify has a beta of 2.61, indicating that its stock price is 161% more volatile than the S&P 500.

Summary

Shopify beats Formula Systems (1985) on 12 of the 15 factors compared between the two stocks.

About Formula Systems (1985)

Formula Systems (1985) Ltd., through its subsidiaries, provides proprietary and non-proprietary software solutions, IT professional services, software product marketing and support, computer infrastructure and integration solutions, and learning and integration worldwide. The company offers computer and telecommunication infrastructure solutions; and sells and markets computers and peripheral equipment, and cloud based solutions and services relating to databases and big data. It also provides customer relations management, computer systems management infrastructures, web world content management, database and data warehouse mining, application integration, database and systems, data management, and software development tools; and application and professional training courses, and advanced professional studies. In addition, the company offers property and casualty insurance platforms, such as Sapiens, Sapiens CoreSuite, Sapiens IDITSuite, and IDIT Go; life, pension, and annuities platforms, including Sapiens, Sapiens CoreSuite, Sapiens UnderwritingPro, Sapiens ApplicationPro, Sapiens IllustrationPro, and Sapiens ConsolidationMaster; Sapiens Cloud-based DigitalSuite; data and analytics platform; and reinsurance software solutions comprising Sapiens ReinsuranceMaster, Sapiens ReinsurancePro, and Sapiens Reinsurance GO. Further, it provides Sapiens workers' compensation solutions; Sapiens medical professional liability solutions; financial and compliance solutions, such as Sapiens FinancialPro, Sapiens Financial GO, Sapiens StatementPro, Sapiens CheckPro, and Sapiens Reporting Tools; Sapiens Decision; and technology-based solutions. Additionally, it offers application development and business process integration platforms; vertical software solutions; strategic consulting and outsourcing services; and professional services in various areas, as well as develops on-premise payroll software. The company was incorporated in 1985 and is headquartered in Or Yehuda, Israel.

About Shopify

Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company’s platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing. It also sells custom themes and apps, and registration of domain names; and merchant solutions, which include accepting payments, shipping, and securing working capital. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is headquartered in Ottawa, Canada.