Analyzing Tucows (NASDAQ:TCX) & Formula Systems (1985) (NASDAQ:FORTY)

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

Insider and Institutional Ownership

34.8% of Formula Systems (1985) shares are held by institutional investors. Comparatively, 73.6% of Tucows shares are held by institutional investors. 23.3% of Formula Systems (1985) shares are held by company insiders. Comparatively, 8.4% of Tucows shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Formula Systems (1985) has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500. Comparatively, Tucows has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Formula Systems (1985) and Tucows, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Formula Systems (1985)	0	1	0	0	2.00
Tucows	1	0	0	0	1.00

Earnings and Valuation

This table compares Formula Systems (1985) and Tucows”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	0.62	$606.48 million	$39.83	2.96
Tucows	$390.30 million	0.39	-$75.82 million	($6.37)	-2.12

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

Profitability

This table compares Formula Systems (1985) and Tucows’ 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%
Tucows	-21.20%	N/A	-9.48%

Summary

Formula Systems (1985) beats Tucows on 11 of the 12 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 Tucows

Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in North America and Europe. It operates in three segments: Ting, Wavelo and Tucows Domains. The Ting segment provides fiber and fixed wireless internet services. The Wavelo segment offers individual developer tools, subscription, billing management, network orchestration, and provisioning services. This segment also provides billing solutions under Platypus brand. The Tucows Domains segment offers name registration, as well as value added services under OpenSRS, eNom, Ascio, EPAG, and Hover brands. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.