Contrasting Tucows (NASDAQ:TCX) & Formula Systems (1985) (NASDAQ:FORTY)

Tucows (NASDAQ:TCX) and Formula Systems (1985) (NASDAQ:FORTY) are both small-cap technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Earnings & Valuation

This table compares Tucows and Formula Systems (1985)”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tucows	$390.30 million	0.34	-$75.82 million	($6.37)	-1.84
Formula Systems (1985)	$2.63 billion	0.69	$606.48 million	$39.83	2.95

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	-17.91%	N/A	-8.22%
Formula Systems (1985)	21.57%	4.38%	2.13%

Volatility and Risk

Tucows has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Formula Systems (1985) has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.

Institutional and Insider Ownership

73.6% of Tucows shares are held by institutional investors. Comparatively, 34.8% of Formula Systems (1985) shares are held by institutional investors. 8.4% of Tucows shares are held by insiders. Comparatively, 23.3% of Formula Systems (1985) shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets 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 is an internet services and technology company founded in 1993. Its businesses include domain name services, broadband internet and software for communications service providers. Through Tucows Domains, the company provides domain registration and related services to businesses and consumers. Its brands include OpenSRS, which serves resellers, and Hover, a retail domain and email provider. Tucows serves customers and partners internationally through its domain business. Tucows also operates Ting Internet, a fiber broadband provider serving communities in the United States, and Wavelo, which develops software for telecommunications providers, including tools for managing subscribers and billing.

About Formula Systems (1985)

Formula Systems (1985) Ltd. is an Israel-based holding company focused on software and information technology services. Through its subsidiaries, it provides software development, systems integration, IT consulting and outsourcing, and business software for areas including insurance and financial services. Its principal subsidiaries include Matrix IT, Sapiens International and Magic Software Enterprises. Their offerings span technology services and digital solutions, insurance and financial software, and application development and integration platforms.