Shopify (NASDAQ:SHOP) & Formula Systems (1985) (NASDAQ:FORTY) Head-To-Head Analysis

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

Volatility & Risk

Shopify has a beta of 2.61, indicating that its share price is 161% more volatile than the S&P 500. Comparatively, Formula Systems (1985) has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Shopify and Formula Systems (1985), as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shopify	0	10	36	2	2.83
Formula Systems (1985)	0	1	0	0	2.00

Shopify presently has a consensus target price of $172.00, indicating a potential upside of 15.13%. Given Shopify’s stronger consensus rating and higher probable upside, research analysts clearly believe Shopify is more favorable than Formula Systems (1985).

Earnings & Valuation

This table compares Shopify and Formula Systems (1985)”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shopify	$11.56 billion	16.63	$1.23 billion	$1.48	100.95
Formula Systems (1985)	$2.93 billion	0.59	$606.48 million	$39.83	2.85

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Shopify	14.53%	12.58%	10.94%
Formula Systems (1985)	21.57%	4.38%	2.13%

Insider & Institutional Ownership

69.3% of Shopify shares are owned by institutional investors. Comparatively, 34.8% of Formula Systems (1985) shares are owned by institutional investors. 23.3% of Formula Systems (1985) shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Shopify beats Formula Systems (1985) on 12 of the 15 factors compared between the two stocks.

About Shopify

Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company’s platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing. It also sells custom themes and apps, and registration of domain names; and merchant solutions, which include accepting payments, shipping, and securing working capital. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is headquartered in Ottawa, Canada.

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.