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Formula Systems
(NASDAQ:FORTY)
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Rating:69Neutral
Price Target:
$136.00
▲(15.73% 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 Operating Growth
The latest results show broad year-over-year expansion in revenue and operating income, indicating stronger activity across the subsidiary portfolio. If sustained, this growth can improve operating leverage, support reinvestment, and strengthen Formula Systems’ position in enterprise IT services and software.
Negative Factors
2025 Revenue Contraction
The reversal from several years of revenue growth to an 8.3% decline signals a meaningful slowdown in demand or business activity. Sustained top-line weakness would reduce scale benefits, constrain investment capacity, and make future margin recovery harder across the subsidiary portfolio.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong 2026 Operating Growth
The latest results show broad year-over-year expansion in revenue and operating income, indicating stronger activity across the subsidiary portfolio. If sustained, this growth can improve operating leverage, support reinvestment, and strengthen Formula Systems’ position in enterprise IT services and software.
Read all positive factors
Formula Systems (FORTY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.75B
Dividend Yield1.76%
Average Volume (3M)283.00
Price to Earnings (P/E)2.7
Beta (1Y)0.78
Revenue Growth1.23%
EPS Growth708.67%
CountryUS
Employees19,337
SectorGeneral
Sector StrengthN/A
IndustryInformation Technology Services
Share Statistics
EPS (TTM)41.07
Shares Outstanding15,334,667
10 Day Avg. Volume214
30 Day Avg. Volume283
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
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 | 412.11M | 342.36M | 294.85M | 360.27M | 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
Negative
117.51
Price Trends
114.23
Positive
118.74
Negative
127.00
Negative
Market Momentum
1.14
Positive
44.03
Neutral
7.36
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FORTY, the sentiment is Negative. The current price of 117.51 is below the 20-day moving average (MA) of 121.83, above the 50-day MA of 114.23, and below the 200-day MA of 127.00, indicating a neutral trend. The MACD of 1.14 indicates Positive momentum. The RSI at 44.03 is Neutral, neither overbought nor oversold. The STOCH value of 7.36 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.11B | 64.15 | 4.08% | ― | 32.21% | 441.25% | |
73 Outperform | $1.54B | 13.79 | 5.33% | ― | -1.26% | 2.59% | |
69 Neutral | $1.75B | 2.73 | 54.28% | 1.76% | 1.23% | 708.67% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% | |
53 Neutral | $1.72B | 14.18 | 4.06% | 5.60% | -2.42% | -65.01% | |
51 Neutral | $1.68B | -3.39 | -62.87% | 1.14% | -37.55% | -18.96% |
* General Sector Average
FORTY
Formula Systems
115.03
-11.07
-8.78%
GLOB
Globant SA
35.59
-21.90
-38.09%
DXC
DXC Technology
10.78
-3.53
-24.67%
AI
C3ai
10.48
-8.03
-43.38%
FLYW
Flywire
17.34
4.20
31.96%
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%...
Formula Systems Shareholders Approve Board Slate and 2026 Auditor at July Meeting
Jul 20, 2026
On July 20, 2026, Formula Systems held its annual general meeting of shareholders in Or Yehuda, Israel, where investors voted on board and governance matters. The meeting results underscore continuity in leadership and oversight for the coming yea...
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.