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Magic's Growth Strengthens Asseco Case, But Receivables Are Bloating

Mar. 03, 2022 1:00 AM ETMagic Software Enterprises Ltd. (MGIC)


  • We follow Magic Software because it's held by Asseco Poland, one of our favourite Eastern European companies that has sold off over the Russia-Ukraine conflict.
  • It continues to deliver strong organic growth and generate a lot of repeat business.
  • While professional services is growing in the mix, and we'd prefer strength in the software side, Magic demonstrates continued demand for digital transformation.
  • Q4 was especially strong despite difficult comps, delivering double-digit growth, but operating cash flow weirdly declined.
  • The dividend is also attractive for a tech company, but we'd have liked analysts to question the receivables situation before we recommend buying.
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Digital transformation concept. System engineering. Binary code. Programming.

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Magic Software (NASDAQ:NASDAQ:MGIC) is a tech consulting and software company that delivers digital transformation solutions, focusing on getting businesses deployed on the cloud. In a post-COVID environment, business has been booming. Despite strong comps towards the end of 2020, the company continues to deliver organic

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of ASOZF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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