Tucows (NASDAQ:TCX – Get Free Report) and Formula Systems (1985) (NASDAQ:FORTY – Get Free Report) are both small-cap technology companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.
Volatility & Risk
Tucows has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Formula Systems (1985) has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.
Earnings and Valuation
This table compares Tucows and Formula Systems (1985)”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Tucows | $390.30 million | 0.39 | -$75.82 million | ($6.37) | -2.12 |
| Formula Systems (1985) | $2.93 billion | 0.62 | $606.48 million | $39.83 | 2.96 |
Formula Systems (1985) has higher revenue and earnings than Tucows. Tucows 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.
Profitability
This table compares Tucows and Formula Systems (1985)’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Tucows | -21.20% | N/A | -9.48% |
| Formula Systems (1985) | 21.57% | 4.38% | 2.13% |
Institutional & Insider Ownership
73.6% of Tucows shares are owned by institutional investors. Comparatively, 34.8% of Formula Systems (1985) shares are owned by institutional investors. 8.4% of Tucows shares are owned by insiders. Comparatively, 23.3% of Formula Systems (1985) shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Analyst Recommendations
This is a breakdown of recent ratings and recommmendations for Tucows and Formula Systems (1985), as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Tucows | 1 | 0 | 0 | 0 | 1.00 |
| Formula Systems (1985) | 0 | 1 | 0 | 0 | 2.00 |
Summary
Formula Systems (1985) beats Tucows on 11 of the 12 factors compared between the two stocks.
About Tucows
Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in North America and Europe. It operates in three segments: Ting, Wavelo and Tucows Domains. The Ting segment provides fiber and fixed wireless internet services. The Wavelo segment offers individual developer tools, subscription, billing management, network orchestration, and provisioning services. This segment also provides billing solutions under Platypus brand. The Tucows Domains segment offers name registration, as well as value added services under OpenSRS, eNom, Ascio, EPAG, and Hover brands. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.
About Formula Systems (1985)
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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.
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