Freshworks (NASDAQ:FRSH – Get Rating) and Magic Software Enterprises (NASDAQ:MGIC – Get Rating) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, dividends, valuation, risk, institutional ownership, analyst recommendations and earnings.
Risk and Volatility
Freshworks has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, Magic Software Enterprises has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and price targets for Freshworks and Magic Software Enterprises, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Freshworks | 0 | 7 | 8 | 0 | 2.53 |
| Magic Software Enterprises | 0 | 0 | 0 | 0 | N/A |
Earnings and Valuation
This table compares Freshworks and Magic Software Enterprises’ gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Freshworks | $498.00 million | 9.43 | -$232.13 million | ($0.78) | -20.68 |
| Magic Software Enterprises | $570.53 million | 1.04 | $40.47 million | $0.79 | 15.35 |
Magic Software Enterprises has higher revenue and earnings than Freshworks. Freshworks 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 Freshworks and Magic Software Enterprises’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Freshworks | -43.32% | -20.67% | -15.91% |
| Magic Software Enterprises | 7.21% | 19.31% | 10.30% |
Institutional and Insider Ownership
46.4% of Freshworks shares are held by institutional investors. Comparatively, 18.2% of Magic Software Enterprises shares are held by institutional investors. 26.7% of Freshworks shares are held by insiders. Comparatively, 4.5% of Magic Software Enterprises shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Summary
Magic Software Enterprises beats Freshworks on 9 of the 13 factors compared between the two stocks.
About Freshworks
Freshworks Inc., a software development company, provides modern software-as-a-service products worldwide. Freshworks Inc. was formerly known as Freshdesk Inc. and changed its name to Freshworks Inc. in June 2017. The company was incorporated in 2010 and is headquartered in San Mateo, California.
About Magic Software Enterprises
Magic Software Enterprises Ltd. engages in the provision of proprietary application development and business process integration platforms, vertical software solutions, and vendor of information technology (IT) outsourcing software services. It operates through Software Services and IT Professional Services segments. The Software Services segment includes proprietary and non-proprietary software technology and complementary services. The IT Professional Services segment offers services in the areas of infrastructure design and delivery; application development; technology planning and implementation services; communications services and solutions; and supplemental staffing services. The company was founded by David Assia on February 10, 1983 and is headquartered in Or Yehuda, Israel.
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