Formula Systems (1985) Ltd. American Depositary Shares (FORTY)

FairStock Score: 54/100 — MIXED

Key Financials

Strengths

• Conservative balance sheet with debt-to-equity of just 0.33, providing financial flexibility
• Revenue growth of 26.9% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($68) with negative 89% margin of safety—limited downside protection
• Altman Z-Score of 1.2 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Formula Systems (1985) Ltd. American Depositary Shares is a micro-cap technology company valued at $2.0 billion. Revenue stands at $2.6 billion. From a quality standpoint, Formula shows distressed Altman Z-Score of 1.2 warrants caution and modest 7% ROE. On valuation, the stock is commanding a steep 58.7x multiple, with trades above its Graham Number with a negative 89% margin. Growth dynamics show revenue growing at 26.9% and profit growth of 2666.4%. The 1.9% dividend yield adds an income component for patient holders. Our composite FairStock Score of 54/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Formula's 27% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. Operational leverage in the business model means incremental revenue growth could disproportionately boost bottom-line profitability.

Bear Case

At 59x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer