OPEN TEXT CORP (OTEX.CA) Stock Fundamental Analysis
Canada - TSX:OTEX - CA6837151068 - Common Stock
52.15 CAD
+0.58 (+1.12%)
We assign a fundamental rating of 5 out of 10 to OTEX. OTEX was compared to 65 industry peers in the Software industry. While OTEX has a great profitability rating, there are quite some concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on OTEX.
1. Profitability
1.1 Basic Checks
OTEX had positive earnings in the past year.
OTEX had a positive operating cash flow in the past year.
OTEX had positive earnings in each of the past 5 years.
Each year in the past 5 years OTEX had a positive operating cash flow.
1.2 Ratios
OTEX has a better Return On Assets (3.16%) than 66.15% of its industry peers.
OTEX's Return On Equity of 11.09% is fine compared to the rest of the industry. OTEX outperforms 78.46% of its industry peers.
The Return On Invested Capital of OTEX (7.26%) is better than 76.92% of its industry peers.
The Average Return On Invested Capital over the past 3 years for OTEX is significantly below the industry average of 12.21%.
The last Return On Invested Capital (7.26%) for OTEX is above the 3 year average (6.00%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.16% | ||
| ROE | 11.09% | ||
| ROIC | 7.26% |
ROA(3y)2.44%
ROA(5y)2.89%
ROE(3y)8.64%
ROE(5y)8.67%
ROIC(3y)6%
ROIC(5y)6.21%
1.3 Margins
OTEX's Profit Margin of 8.43% is amongst the best of the industry. OTEX outperforms 83.08% of its industry peers.
In the last couple of years the Profit Margin of OTEX has grown nicely.
Looking at the Operating Margin, with a value of 20.09%, OTEX belongs to the top of the industry, outperforming 90.77% of the companies in the same industry.
OTEX's Operating Margin has been stable in the last couple of years.
Looking at the Gross Margin, with a value of 72.25%, OTEX is in the better half of the industry, outperforming 73.85% of the companies in the same industry.
OTEX's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 20.09% | ||
| PM (TTM) | 8.43% | ||
| GM | 72.25% |
OM growth 3Y0.5%
OM growth 5Y0.68%
PM growth 3Y-9.47%
PM growth 5Y2.29%
GM growth 3Y1.26%
GM growth 5Y1.3%
2. Health
2.1 Basic Checks
OTEX has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, OTEX has less shares outstanding
The number of shares outstanding for OTEX has been reduced compared to 5 years ago.
OTEX has a worse debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.34, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.34, OTEX is in line with its industry, outperforming 46.15% of the companies in the same industry.
The Debt to FCF ratio of OTEX is 9.28, which is on the high side as it means it would take OTEX, 9.28 years of fcf income to pay off all of its debts.
OTEX has a better Debt to FCF ratio (9.28) than 63.08% of its industry peers.
OTEX has a Debt/Equity ratio of 1.61. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 1.61, OTEX is doing worse than 69.23% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.61 | ||
| Debt/FCF | 9.28 | ||
| Altman-Z | 1.34 |
ROIC/WACC0.7
WACC10.37%
2.3 Liquidity
A Current Ratio of 0.80 indicates that OTEX may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.80, OTEX is doing worse than 63.08% of the companies in the same industry.
A Quick Ratio of 0.80 indicates that OTEX may have some problems paying its short term obligations.
With a Quick ratio value of 0.80, OTEX is not doing good in the industry: 61.54% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.8 | ||
| Quick Ratio | 0.8 |
3. Growth
3.1 Past
OTEX shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -8.15%.
Measured over the past 5 years, OTEX shows a small growth in Earnings Per Share. The EPS has been growing by 5.79% on average per year.
OTEX shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -10.42%.
OTEX shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.69% yearly.
EPS 1Y (TTM)-8.15%
EPS 3Y5.95%
EPS 5Y5.79%
EPS Q2Q%-1.02%
Revenue 1Y (TTM)-10.42%
Revenue growth 3Y13.94%
Revenue growth 5Y10.69%
Sales Q2Q%-3.79%
3.2 Future
The Earnings Per Share is expected to grow by 7.42% on average over the next years.
Based on estimates for the next years, OTEX will show a small growth in Revenue. The Revenue will grow by 4.54% on average per year.
EPS Next Y10.21%
EPS Next 2Y9.19%
EPS Next 3Y7.42%
EPS Next 5YN/A
Revenue Next Year1.77%
Revenue Next 2Y1.67%
Revenue Next 3Y1.56%
Revenue Next 5Y4.54%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 9.86, the valuation of OTEX can be described as very reasonable.
OTEX's Price/Earnings ratio is rather cheap when compared to the industry. OTEX is cheaper than 92.31% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.41, OTEX is valued rather cheaply.
With a Price/Forward Earnings ratio of 8.94, the valuation of OTEX can be described as very reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 90.77% of the companies listed in the same industry.
OTEX is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.87, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.86 | ||
| Fwd PE | 8.94 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, OTEX is valued a bit cheaper than the industry average as 80.00% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, OTEX is valued cheaply inside the industry as 83.08% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.97 | ||
| EV/EBITDA | 8.69 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of OTEX may justify a higher PE ratio.
PEG (NY)0.97
PEG (5Y)1.7
EPS Next 2Y9.19%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
OTEX has a Yearly Dividend Yield of 2.63%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.44, OTEX pays a better dividend. On top of this OTEX pays more dividend than 98.46% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, OTEX has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.63% |
5.2 History
On average, the dividend of OTEX grows each year by 8.34%, which is quite nice.
OTEX has paid a dividend for at least 10 years, which is a reliable track record.
OTEX has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)8.34%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
OTEX pays out 62.29% of its income as dividend. This is not a sustainable payout ratio.
The dividend of OTEX is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP62.29%
EPS Next 2Y9.19%
EPS Next 3Y7.42%
TSX:OTEX (9/22/2025, 7:00:00 PM)
52.15
+0.58 (+1.12%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.68%
Inst Owner ChangeN/A
Ins Owners2.13%
Ins Owner ChangeN/A
Market Cap13.26B
Analysts76
Price Target56.19 (7.75%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.63% |
Yearly Dividend1.44
Dividend Growth(5Y)8.34%
DP62.29%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)12.19%
Min EPS beat(2)8.64%
Max EPS beat(2)15.74%
EPS beat(4)4
Avg EPS beat(4)13.93%
Min EPS beat(4)8.64%
Max EPS beat(4)17.92%
EPS beat(8)6
Avg EPS beat(8)7.45%
EPS beat(12)9
Avg EPS beat(12)10.2%
EPS beat(16)12
Avg EPS beat(16)7.91%
Revenue beat(2)0
Avg Revenue beat(2)-2.22%
Min Revenue beat(2)-4.03%
Max Revenue beat(2)-0.42%
Revenue beat(4)0
Avg Revenue beat(4)-2.03%
Min Revenue beat(4)-4.03%
Max Revenue beat(4)-0.42%
Revenue beat(8)1
Avg Revenue beat(8)-1.85%
Revenue beat(12)3
Avg Revenue beat(12)-1.03%
Revenue beat(16)3
Avg Revenue beat(16)-1.18%
PT rev (1m)0%
PT rev (3m)0%
EPS NQ rev (1m)0%
EPS NQ rev (3m)5.73%
EPS NY rev (1m)0%
EPS NY rev (3m)1.51%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.47%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.86 | ||
| Fwd PE | 8.94 | ||
| P/S | 1.86 | ||
| P/FCF | 13.97 | ||
| P/OCF | 11.56 | ||
| P/B | 2.44 | ||
| P/tB | N/A | ||
| EV/EBITDA | 8.69 |
EPS(TTM)5.29
EY10.14%
EPS(NY)5.83
Fwd EY11.18%
FCF(TTM)3.73
FCFY7.16%
OCF(TTM)4.51
OCFY8.65%
SpS28.08
BVpS21.34
TBVpS-30.23
PEG (NY)0.97
PEG (5Y)1.7
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.16% | ||
| ROE | 11.09% | ||
| ROCE | 9.42% | ||
| ROIC | 7.26% | ||
| ROICexc | 8.12% | ||
| ROICexgc | 212.78% | ||
| OM | 20.09% | ||
| PM (TTM) | 8.43% | ||
| GM | 72.25% | ||
| FCFM | 13.3% |
ROA(3y)2.44%
ROA(5y)2.89%
ROE(3y)8.64%
ROE(5y)8.67%
ROIC(3y)6%
ROIC(5y)6.21%
ROICexc(3y)6.7%
ROICexc(5y)7.26%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)7.77%
ROCE(5y)8.05%
ROICexcg growth 3Y40.72%
ROICexcg growth 5Y10.07%
ROICexc growth 3Y2.2%
ROICexc growth 5Y2.95%
OM growth 3Y0.5%
OM growth 5Y0.68%
PM growth 3Y-9.47%
PM growth 5Y2.29%
GM growth 3Y1.26%
GM growth 5Y1.3%
F-Score4
Asset Turnover0.38
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.61 | ||
| Debt/FCF | 9.28 | ||
| Debt/EBITDA | 3.78 | ||
| Cap/Depr | 22.34% | ||
| Cap/Sales | 2.77% | ||
| Interest Coverage | 2.95 | ||
| Cash Conversion | 49.45% | ||
| Profit Quality | 157.71% | ||
| Current Ratio | 0.8 | ||
| Quick Ratio | 0.8 | ||
| Altman-Z | 1.34 |
F-Score4
WACC10.37%
ROIC/WACC0.7
Cap/Depr(3y)20.3%
Cap/Depr(5y)18.32%
Cap/Sales(3y)2.76%
Cap/Sales(5y)2.57%
Profit Quality(3y)255.78%
Profit Quality(5y)250.53%
High Growth Momentum
Growth
EPS 1Y (TTM)-8.15%
EPS 3Y5.95%
EPS 5Y5.79%
EPS Q2Q%-1.02%
EPS Next Y10.21%
EPS Next 2Y9.19%
EPS Next 3Y7.42%
EPS Next 5YN/A
Revenue 1Y (TTM)-10.42%
Revenue growth 3Y13.94%
Revenue growth 5Y10.69%
Sales Q2Q%-3.79%
Revenue Next Year1.77%
Revenue Next 2Y1.67%
Revenue Next 3Y1.56%
Revenue Next 5Y4.54%
EBIT growth 1Y1.58%
EBIT growth 3Y14.51%
EBIT growth 5Y11.45%
EBIT Next Year15.31%
EBIT Next 3Y7.63%
EBIT Next 5YN/A
FCF growth 1Y-14.97%
FCF growth 3Y-8.21%
FCF growth 5Y-4.86%
OCF growth 1Y-14.16%
OCF growth 3Y-5.42%
OCF growth 5Y-2.74%