Head-To-Head Analysis: Formula Systems (1985) (NASDAQ:FORTY) vs. Cass Information Systems (NASDAQ:CASS)

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

Dividends

Cass Information Systems pays an annual dividend of $1.24 per share and has a dividend yield of 2.9%. Formula Systems (1985) pays an annual dividend of $1.33 per share and has a dividend yield of 1.0%. Cass Information Systems pays out 66.7% of its earnings in the form of a dividend. Formula Systems (1985) pays out 26.8% 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. Cass Information Systems has increased its dividend for 23 consecutive years. Cass Information Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Cass Information Systems and Formula Systems (1985)”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cass Information Systems	$199.19 million	2.88	$19.17 million	$1.86	23.35
Formula Systems (1985)	$2.76 billion	0.72	$79.67 million	$4.97	26.19

Formula Systems (1985) has higher revenue and earnings than Cass Information Systems. Cass Information Systems 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.

Volatility & Risk

Cass Information Systems has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500. Comparatively, Formula Systems (1985) has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Cass Information Systems and Formula Systems (1985), as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cass Information Systems	0	0	1	0	3.00
Formula Systems (1985)	0	0	0	0	0.00

Cass Information Systems presently has a consensus target price of $48.00, suggesting a potential upside of 10.52%. Given Cass Information Systems’ stronger consensus rating and higher probable upside, analysts plainly believe Cass Information Systems is more favorable than Formula Systems (1985).

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cass Information Systems	13.22%	9.02%	0.91%
Formula Systems (1985)	2.70%	5.58%	2.58%

Institutional & Insider Ownership

59.1% of Cass Information Systems shares are held by institutional investors. Comparatively, 34.8% of Formula Systems (1985) shares are held by institutional investors. 3.2% of Cass Information Systems shares are held by insiders. Comparatively, 23.3% of Formula Systems (1985) shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Cass Information Systems beats Formula Systems (1985) on 9 of the 17 factors compared between the two stocks.

About Cass Information Systems

Cass Information Systems, Inc. provides payment and information processing services to manufacturing, distribution, and retail enterprises in the United States. The company operates through two segments, Information Services and Banking Services. Its services include freight invoice rating, payment processing, auditing, and the generation of accounting and transportation information. The company also processes and pays facility-related invoices, such as electricity, gas, waste, and telecommunications expenses; and provides telecom expense management solutions, as well as church management software solution and on-line platform to provide generosity services for faith-based and non-profit organizations. In addition, the company, through its banking subsidiary, Cass Commercial Bank, provides a range of banking products and services, such as demand, savings, time, and money market deposits; commercial, industrial, commercial real estate, and construction and land development loans; and cash management services to privately held businesses, restaurant franchises, and faith-related ministries. Further, it provides B2B payment platform for clients that require an agile fintech partner. It operates through its banking facility near downtown St. Louis, Missouri; operating branch in the Bridgeton, Missouri; and leased facilities in Colorado Springs, Colorado. The company was formerly known as Cass Commercial Corporation and changed its name to Cass Information Systems, Inc. in January 2001. Cass Information Systems, Inc. was founded in 1906 and is headquartered in Saint Louis, Missouri.

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.