Financial Contrast: Blackbaud (BLKB) & Magic Software Enterprises (MGIC)

Blackbaud (NASDAQ: BLKB) and Magic Software Enterprises (NASDAQ:MGIC) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Profitability

This table compares Blackbaud and Magic Software Enterprises’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Blackbaud 8.92% 28.66% 6.08%
Magic Software Enterprises 5.90% 10.41% 6.41%

Risk and Volatility

Blackbaud has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Blackbaud and Magic Software Enterprises, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Blackbaud 1 4 2 0 2.14
Magic Software Enterprises 1 0 2 0 2.33

Blackbaud presently has a consensus target price of $105.80, indicating a potential downside of 6.05%. Magic Software Enterprises has a consensus target price of $10.25, indicating a potential upside of 19.88%. Given Magic Software Enterprises’ stronger consensus rating and higher probable upside, analysts clearly believe Magic Software Enterprises is more favorable than Blackbaud.

Institutional & Insider Ownership

10.1% of Magic Software Enterprises shares are held by institutional investors. 1.6% of Blackbaud 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 endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Blackbaud pays an annual dividend of $0.48 per share and has a dividend yield of 0.4%. Magic Software Enterprises pays an annual dividend of $0.26 per share and has a dividend yield of 3.0%. Blackbaud pays out 30.2% of its earnings in the form of a dividend. Magic Software Enterprises pays out 56.5% 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.

Earnings and Valuation

This table compares Blackbaud and Magic Software Enterprises’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Blackbaud $788.31 million 6.93 $65.93 million $1.59 70.82
Magic Software Enterprises $257.99 million 1.62 $15.44 million $0.46 18.59

Blackbaud has higher revenue and earnings than Magic Software Enterprises. Magic Software Enterprises is trading at a lower price-to-earnings ratio than Blackbaud, indicating that it is currently the more affordable of the two stocks.

Summary

Blackbaud beats Magic Software Enterprises on 8 of the 15 factors compared between the two stocks.

About Blackbaud

Blackbaud, Inc. provides cloud software solutions to nonprofits, foundations, corporations, education institutions, healthcare organizations, and other charitable giving entities primarily in the United States, Canada, the United Kingdom, and Australia. The company offers Raiser's Edge NXT and Blackbaud CRM (constituent relationship management), which are fundraising and relationship management solutions; Luminate CRM for campaign management, constituent relations, business intelligence, and analytics; eTapestry, a cloud fundraising and donor management solution; everydayhero, a cloud crowdfundraising solution; and JustGiving, a social platform for giving. It also provides solutions for Luminate Online that builds online fundraising campaigns; Blackbaud Online Express, a cloud fundraising and marketing tool; and Blackbaud NetCommunity, an online marketing and communications tool. In addition, the company offers Financial Edge NXT, a cloud accounting solution; GIFTS Online, a cloud solution; FIMS, a foundation management system; and Blackbaud Outcomes that empowers funders and nonprofits. Further, it provides onMessage, a content management system; onRecord, a new student information system; onCampus, a learning management system; onboard, an enrollment management system; Smart Tuition, a solution that helps administrative staff; Smart Aid, a proprietary hobbies, interest, and lifestyles profile; AcademicWorks, a scholarship management platform; and Altru, a cloud solution that helps arts and cultural organizations. Additionally, the company offers AngelPoints, an integrated corporate social responsibility solution; Blackbaud's Intelligence for Good, which combine artificial intelligence, analytics, big data, and expertise in cloud-based services and other channels; donor acquisition tools; prospect research engagements; and data enrichment and performance management solutions. Blackbaud, Inc. was founded in 1981 and is headquartered in Charleston, South Carolina.

About Magic Software Enterprises

Magic Software Enterprises Ltd. provides proprietary application development, business process integration, and vertical software solutions and related professional services in Israel and internationally. The company's Software Solutions segment develops, markets, sells, and supports a proprietary and none proprietary application platform, software applications, and business and process integration solutions and related services. Its 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, as well as supplemental outsourcing services. The company offers Magic xpa, a proprietary application platform for developing and deploying business applications; AppBuilder application platform for building, deploying, and maintaining mainframe-grade business applications; and Magic xpi integration platform, a graphical wizard-based code-free solution. It also provides vertical software solutions comprising Clicks, a software solution for healthcare providers; Leap, a software solution for business support systems; Hermes Solution for both hubs and traditional air cargo ground handling operations; HR Pulse, a customized single-tenant software as a service tool that helps organizations to create new human capital management solutions; and MBS Solution, a proprietary system for managing TV broadcast channels. In addition, it provides software maintenance, support, training, and consulting services. It serves oil and gas, telecommunications, financial, healthcare, industrial sectors, as well as public institutions and international agencies. The company was formerly known as Mashov Software Export (1983) Ltd. and changed its name to Magic Software Enterprises Ltd. in 1991. Magic Software Enterprises Ltd. was founded in 1983 and is headquartered in Or Yehuda, Israel.

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