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Formula Systems
(NASDAQ:FORTY)
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Rating:69Neutral
Price Target:
$135.00
▲(14.88% Upside)
Action:Downgraded
Date:08/17/26
The score is driven primarily by solid underlying financial health (strong cash generation and improved leverage) and very attractive valuation (low P/E and a dividend). These positives are tempered by weak technicals (price below key moving averages with negative MACD) and mixed operating performance, including revenue and margin deterioration alongside a likely non-recurring net income spike.
Positive Factors
Strong 2026 growth
The sharp revenue growth reported for both the second quarter and first half indicates stronger demand across the subsidiary portfolio. If sustained, this broader operating expansion can improve scale, support investment in software and services, and strengthen Formula Systems’ position over the next several quarters.
Negative Factors
2025 revenue and margin decline
The 2025 reversal from earlier revenue growth, combined with lower gross and operating margins, signals weaker underlying operating momentum. Persistent pressure would reduce the earnings contribution from the subsidiary portfolio and could limit the cash available for reinvestment, deleveraging, or distributions.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong 2026 growth
The sharp revenue growth reported for both the second quarter and first half indicates stronger demand across the subsidiary portfolio. If sustained, this broader operating expansion can improve scale, support investment in software and services, and strengthen Formula Systems’ position over the next several quarters.
Read all positive factors
Formula Systems (FORTY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.92B
Dividend Yield12.99%
Average Volume (3M)863.00
Price to Earnings (P/E)3.0
Beta (1Y)0.76
Revenue Growth1.23%
EPS Growth708.67%
CountryUS
Employees19,337
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)41.07
Shares Outstanding15,334,667
10 Day Avg. Volume285
30 Day Avg. Volume863
Financial Highlights & Ratios
PEG Ratio-1.40
Price to Book (P/B)1.89
Price to Sales (P/S)0.97
P/FCF Ratio6.82
Enterprise Value/Market Cap0.98
Enterprise Value/Revenue0.64
Enterprise Value/Gross Profit3.22
Enterprise Value/Ebitda6.79
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Formula Systems Business Overview & Revenue Model
Company Description
Formula Systems (1985) Ltd. is a global provider of diverse IT solutions and services, operating through its various subsidiaries. The company specializes in delivering both its own proprietary software and third-party solutions, alongside compreh...
How the Company Makes Money
Formula Systems primarily makes money as a holding company by owning controlling stakes in operating IT and software businesses and consolidating their results. The group’s revenue is generated at the subsidiary level from selling software and del...
Formula Systems Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
66
Positive
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.93B | 2.65B | 2.23B | 2.61B | 2.57B | 2.40B |
| Gross Profit | 581.79M | 451.39M | 400.14M | 642.05M | 622.47M | 563.86M |
| EBITDA | 275.75M | 342.36M | 294.30M | 360.58M | 390.45M | 324.26M |
| Net Income | 634.56M | 28.39M | 80.05M | 63.85M | 81.39M | 54.59M |
Balance Sheet | ||||||
| Total Assets | 3.51B | 3.58B | 3.01B | 2.81B | 2.79B | 2.75B |
| Cash, Cash Equivalents and Short-Term Investments | 864.54M | 1.28B | 563.20M | 528.17M | 569.06M | 512.46M |
| Total Debt | 670.59M | 592.25M | 689.45M | 669.99M | 772.67M | 712.91M |
| Total Liabilities | 1.85B | 1.81B | 1.63B | 1.50B | 1.62B | 1.57B |
| Stockholders Equity | 1.21B | 1.35B | 679.34M | 625.76M | 551.87M | 540.96M |
Cash Flow | ||||||
| Free Cash Flow | 0.00 | 374.82M | 295.49M | 262.97M | 199.82M | 177.42M |
| Operating Cash Flow | 0.00 | 391.13M | 324.45M | 294.97M | 239.14M | 208.48M |
| Investing Cash Flow | 0.00 | 539.25M | -78.18M | -139.24M | -74.30M | -110.19M |
| Financing Cash Flow | 0.00 | -202.07M | -184.96M | -243.18M | -70.98M | -114.13M |
Formula Systems Technical Analysis
Positive
117.51
Price Trends
117.00
Positive
113.58
Positive
120.12
Negative
Market Momentum
0.58
Negative
51.25
Neutral
77.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FORTY, the sentiment is Positive. The current price of 117.51 is above the 20-day moving average (MA) of 115.03, above the 50-day MA of 117.00, and below the 200-day MA of 120.12, indicating a neutral trend. The MACD of 0.58 indicates Negative momentum. The RSI at 51.25 is Neutral, neither overbought nor oversold. The STOCH value of 77.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FORTY.
Formula Systems Risk Analysis
Formula Systems disclosed 52 risk factors in its most recent earnings report. Formula Systems reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
We may encounter difficulties in realizing the potential financial or strategic benefits of recent business acquisitions. We expect to make additional acquisitions in the future that could disrupt our operations and harm our operating results. Q4, 2023
2.
Our business depends on generating and maintaining ongoing, profitable client demand for our services and solutions, including through the adaptation and expansion of our services and solutions in response to ongoing changes in technology and offerings, and a significant reduction in such demand or an inability to respond to the evolving technological environment could materially affect our results of operations. Q4, 2023
3.
Political and economic conditions in Israel, including the ongoing war and hostilities between Israel and Hamas Terror Organization and Israel and the Hezbollah Terror Organization in Lebanon, may limit our ability to sell our products. This could have a material adverse effect on our operations and business condition, harm our results of operations and adversely affect our share price. Q4, 2023
Formula Systems Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $147.39B | 18.26 | 26.77% | 2.65% | 6.47% | 11.19% | |
74 Outperform | $31.77B | 15.14 | 14.94% | 1.84% | 5.64% | -5.39% | |
74 Outperform | $19.76B | 14.89 | 15.94% | 4.11% | 0.38% | -8.33% | |
72 Outperform | $7.03B | 18.39 | 11.19% | ― | 10.76% | 4.93% | |
69 Neutral | $1.92B | 2.99 | 54.28% | 12.99% | 1.23% | 708.67% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $2.57B | 21.17 | 4.06% | 5.60% | -2.42% | -65.01% |
* Technology Sector Average
FORTY
Formula Systems
117.01
-19.14
-14.06%
ACN
Accenture
249.37
7.03
2.90%
CTSH
Cognizant
70.54
3.99
6.00%
EPAM
Epam Systems
136.25
-26.20
-16.13%
WIT
Wipro
2.11
-0.47
-18.34%
DXC
DXC Technology
16.09
2.66
19.81%
Formula Systems Corporate Events
Formula Systems Posts Record Q2 and H1 2026 Results, Declares $25 Million Dividend
Aug 25, 2026
On August 25, 2026, Formula Systems reported record financial results for the second quarter and first half ended June 30, 2026, with quarterly revenues up 29.8% year over year to $782.4 million and net income attributable to shareholders up 54.6%...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.