FireEye (NASDAQ: FEYE) and Magic Software Enterprises (NASDAQ:MGIC) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, analyst recommendations, valuation, institutional ownership, profitability and earnings.
Risk & Volatility
FireEye has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent ratings for FireEye and Magic Software Enterprises, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FireEye | 0 | 19 | 11 | 0 | 2.37 |
| Magic Software Enterprises | 0 | 1 | 4 | 0 | 2.80 |
FireEye presently has a consensus price target of $15.90, suggesting a potential upside of 15.50%. Magic Software Enterprises has a consensus price target of $10.00, suggesting a potential upside of 26.58%. Given Magic Software Enterprises’ stronger consensus rating and higher probable upside, analysts clearly believe Magic Software Enterprises is more favorable than FireEye.
Dividends
Magic Software Enterprises pays an annual dividend of $0.17 per share and has a dividend yield of 2.2%. FireEye does not pay a dividend. Magic Software Enterprises pays out 63.0% of its earnings in the form of a dividend.
Profitability
This table compares FireEye and Magic Software Enterprises’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| FireEye | -46.37% | -26.21% | -9.23% |
| Magic Software Enterprises | 5.08% | 10.49% | 6.58% |
Valuation & Earnings
This table compares FireEye and Magic Software Enterprises’ top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| FireEye | $730.32 million | 3.43 | -$161.27 million | ($2.00) | -6.89 |
| Magic Software Enterprises | $235.86 million | 1.49 | $36.98 million | $0.27 | 29.26 |
Magic Software Enterprises has higher revenue, but lower earnings than FireEye. FireEye 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.
Institutional and Insider Ownership
64.3% of FireEye shares are held by institutional investors. Comparatively, 6.2% of Magic Software Enterprises shares are held by institutional investors. 2.4% of FireEye shares are held by insiders. Comparatively, 4.5% of Magic Software Enterprises shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Summary
Magic Software Enterprises beats FireEye on 10 of the 15 factors compared between the two stocks.
FireEye Company Profile
FireEye, Inc. provides intelligence-based cybersecurity solutions that allow organizations to prepare for, prevent, respond to and remediate cyber-attacks. The Company offers various products, such as Threat Detection and Prevention Solutions, which include network security products (NX and Multi-vector Virtual Execution (MVX) Compute Node Series), e-mail security products (EX Series and e-mail threat prevention cloud (ETP), endpoint security products (HX Series) and content security products (FX Series); security management and orchestration products, which include Central Management System and FireEye Security Orchestrator, and forensics and investigation products, which include Threat Analytics Platform (TAP), Malware Analysis (AX Series) and Enterprise Forensics (PX Series and IA Series). Its Subscription and Services offers Threat Intelligence Subscriptions, Security-as-a-Service Offerings, and Customer Support and Maintenance Services.
Magic Software Enterprises Company Profile
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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