FalconStor Software (OTCMKTS:FALC – Get Free Report) and Magic Software Enterprises (NASDAQ:MGIC – Get Free Report) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.
Insider & Institutional Ownership
2.5% of FalconStor Software shares are held by institutional investors. Comparatively, 14.3% of Magic Software Enterprises shares are held by institutional investors. 52.8% of FalconStor Software shares are held by insiders. Comparatively, 4.5% of Magic Software Enterprises shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of recent recommendations and price targets for FalconStor Software and Magic Software Enterprises, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FalconStor Software | 0 | 0 | 0 | 0 | N/A |
| Magic Software Enterprises | 0 | 0 | 1 | 0 | 3.00 |
Risk & Volatility
FalconStor Software has a beta of 2.12, indicating that its stock price is 112% more volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.
Earnings & Valuation
This table compares FalconStor Software 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 | |
| FalconStor Software | $10.05 million | 0.85 | -$1.80 million | ($0.23) | -5.22 |
| Magic Software Enterprises | $566.79 million | 0.75 | $40.47 million | $0.78 | 11.15 |
Magic Software Enterprises has higher revenue and earnings than FalconStor Software. FalconStor Software 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.
Profitability
This table compares FalconStor Software and Magic Software Enterprises’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| FalconStor Software | -0.45% | N/A | -0.49% |
| Magic Software Enterprises | 6.94% | 18.39% | 9.85% |
Summary
Magic Software Enterprises beats FalconStor Software on 10 of the 13 factors compared between the two stocks.
About FalconStor Software
FalconStor Software, Inc., a storage software company, enables enterprise customers and managed service providers to secure, migrate, and protect their data worldwide. It offers FalconStor Virtual Tape Library, a software that emulates and replaces cumbersome physical tape libraries for archive related data preservation without being replacing their enterprise backup and archive software and associated processes; FalconStor StorSafe, a long-term archive data management software; FalconStor Continuous Data Protector delivers instant data availability, and reliable recovery; and FalconStor Network Storage Server for data storage virtualization and business continuity in heterogeneous environments. The company also provides FalconStor StorSigh, a long-term archive and business continuity driven data replication from one centralized management point; FalconStor RecoverTrac Disaster Recovery Technology that streamlines the implementation, testing, and execution of disaster recovery operations; and FalconStor MicroScanTM Technology, which minimizes the amount of data transferred during replication by eliminating inefficiencies at the application and file system layer. It sells its products through authorized partners, value-added resellers, solution providers, system integrators, direct market resellers, distributors, managed service providers, cloud service providers, and original equipment manufacturers, as well as directly to customers. The company was incorporated in 1994 and is headquartered in Austin, Texas.
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. The company's Software Services segment develops, markets, sells, and supports 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, 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. It 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, the company 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.
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