| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 106.41 | n/a |
| Intrinsic value (DCF) | 58.38 | n/a |
| Graham-Dodd Method | n/a | |
| Graham Formula | 68.22 | n/a |
Formula Systems (1985) Ltd. (NASDAQ: FORTY) is a leading global provider of proprietary and non-proprietary software solutions, IT professional services, and computer infrastructure integration. Headquartered in Or Yehuda, Israel, the company operates through subsidiaries, delivering cloud computing, database and big data services, CRM solutions, and enterprise software for industries such as insurance, finance, and reinsurance. With a diversified portfolio including Sapiens CoreSuite for insurance platforms and Sapiens DECISION for decision management, Formula Systems serves businesses worldwide with cutting-edge technology and consulting services. The company’s expertise spans application development, business process integration, and IT infrastructure, positioning it as a key player in the competitive IT services sector. With a market cap of ~$1.5B and a strong presence in multiple verticals, Formula Systems continues to drive innovation in enterprise software and digital transformation.
Formula Systems (FORTY) presents a compelling investment case with its diversified IT services portfolio, recurring revenue streams from software solutions, and a strong foothold in insurance and financial technology. The company’s solid operating cash flow (~$295M) and manageable debt (~$644M) suggest financial stability, while its beta of 0.92 indicates lower volatility than the broader market. However, investors should monitor competitive pressures in the IT services space and potential margin compression from high R&D and integration costs. The dividend yield (~1.56/share) adds income appeal, but growth depends on continued demand for cloud and enterprise software solutions.
Formula Systems competes in the fragmented IT services and software market, differentiating itself through vertical-specific solutions like Sapiens (insurance tech) and a broad service portfolio spanning infrastructure, cloud, and big data. Its competitive advantage lies in deep industry expertise, particularly in insurance software, where its Sapiens suite is a market leader. The company’s global delivery model and ability to integrate proprietary and third-party solutions enhance scalability. However, it faces stiff competition from larger IT consultancies (e.g., Accenture, IBM) with greater resources and broader geographic reach. Formula’s niche focus on insurance and financial compliance software provides defensibility, but it must continuously innovate to counter SaaS-based disruptors and in-house development by clients. Its M&A strategy (via subsidiaries like Matrix and Sapiens) strengthens capabilities but adds integration complexity.