Magic Software Enterprises (NASDAQ:MGIC) Shares Gap Up After Earnings Beat

Key Points

• Magic Software Enterprises shares surged from $18.80 to $19.94 after reporting earnings per share of $0.26, surpassing analyst expectations of $0.24.
• Wall Street Zen downgraded the company's rating from "strong-buy" to "buy" following their earnings announcement.
• Institutional investors account for 24.70% of Magic Software's stock ownership, with several firms significantly increasing their stakes in recent quarters.

Magic Software Enterprises Ltd. (NASDAQ:MGIC - Get Free Report)'s stock price gapped up before the market opened on Wednesday following a better than expected earnings announcement. The stock had previously closed at $18.80, but opened at $19.94. Magic Software Enterprises shares last traded at $20.05, with a volume of 23,458 shares.

The software maker reported $0.26 earnings per share for the quarter, topping the consensus estimate of $0.24 by $0.02. The firm had revenue of $151.60 million for the quarter, compared to the consensus estimate of $143.06 million. Magic Software Enterprises had a return on equity of 15.85% and a net margin of 6.58%.

Magic Software Enterprises Cuts Dividend

The business also recently announced a semi-annual dividend, which will be paid on Wednesday, October 22nd. Stockholders of record on Monday, October 6th will be paid a $0.296 dividend. The ex-dividend date is Monday, October 6th. This represents a dividend yield of 290.0%. Magic Software Enterprises's dividend payout ratio (DPR) is 83.33%.

Analyst Ratings Changes

A number of equities research analysts have weighed in on MGIC shares. Barclays restated an "overweight" rating and set a $18.00 price objective (up previously from $16.00) on shares of Magic Software Enterprises in a research note on Wednesday. Wall Street Zen downgraded Magic Software Enterprises from a "buy" rating to a "hold" rating in a report on Saturday.

Institutional Trading of Magic Software Enterprises

Several hedge funds have recently added to or reduced their stakes in the business. State of Tennessee Department of Treasury acquired a new position in shares of Magic Software Enterprises during the 2nd quarter valued at $46,000. Tidal Investments LLC grew its holdings in shares of Magic Software Enterprises by 48.6% in the 2nd quarter. Tidal Investments LLC now owns 36,403 shares of the software maker's stock worth $696,000 after acquiring an additional 11,909 shares during the last quarter. Ameriprise Financial Inc. acquired a new position in shares of Magic Software Enterprises in the 2nd quarter worth $260,000. Raymond James Financial Inc. purchased a new position in shares of Magic Software Enterprises during the second quarter valued at $33,000. Finally, Arrowstreet Capital Limited Partnership grew its holdings in shares of Magic Software Enterprises by 133.2% during the second quarter. Arrowstreet Capital Limited Partnership now owns 126,278 shares of the software maker's stock valued at $2,415,000 after buying an additional 72,117 shares in the last quarter. Institutional investors own 24.70% of the company's stock.

Magic Software Enterprises Stock Down 0.9%

The firm has a market cap of $990.35 million, a PE ratio of 25.86 and a beta of 1.04. The company has a debt-to-equity ratio of 0.14, a current ratio of 1.61 and a quick ratio of 1.61. The business has a fifty day moving average price of $19.51 and a two-hundred day moving average price of $15.74.

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. Its Software Services segment develops, markets, sells, and supports application platform, software applications, and business and process integration solutions and related services.