OPEN TEXT CORP (OTEX.CA) Stock Fundamental Analysis
TSX:OTEX - Toronto Stock Exchange - CA6837151068 - Common Stock - Currency: CAD
Overall OTEX gets a fundamental rating of 5 out of 10. We evaluated OTEX against 63 industry peers in the Software industry. OTEX scores excellent on profitability, but there are concerns on its financial health. OTEX is valued quite cheap, but it does not seem to be growing. Finally OTEX also has an excellent dividend rating.
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.
Each year in the past 5 years OTEX has been profitable.
Each year in the past 5 years OTEX had a positive operating cash flow.
1.2 Ratios
OTEX's Return On Assets of 4.76% is fine compared to the rest of the industry. OTEX outperforms 71.43% of its industry peers.
With a decent Return On Equity value of 15.87%, OTEX is doing good in the industry, outperforming 77.78% of the companies in the same industry.
OTEX's Return On Invested Capital of 5.98% is fine compared to the rest of the industry. OTEX outperforms 73.02% of its industry peers.
OTEX had an Average Return On Invested Capital over the past 3 years of 4.80%. This is significantly below the industry average of 12.52%.
The 3 year average ROIC (4.80%) for OTEX is below the current ROIC(5.98%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.76% | ||
| ROE | 15.87% | ||
| ROIC | 5.98% |
ROA(3y)2.69%
ROA(5y)2.72%
ROE(3y)8.22%
ROE(5y)7.62%
ROIC(3y)4.8%
ROIC(5y)5.02%
1.3 Margins
Looking at the Profit Margin, with a value of 12.55%, OTEX belongs to the top of the industry, outperforming 84.13% of the companies in the same industry.
In the last couple of years the Profit Margin of OTEX has declined.
With an excellent Operating Margin value of 19.51%, OTEX belongs to the best of the industry, outperforming 90.48% of the companies in the same industry.
In the last couple of years the Operating Margin of OTEX has declined.
OTEX has a Gross Margin of 72.30%. This is in the better half of the industry: OTEX outperforms 74.60% of its industry peers.
OTEX's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.51% | ||
| PM (TTM) | 12.55% | ||
| GM | 72.3% |
OM growth 3Y-6.86%
OM growth 5Y-3.35%
PM growth 3Y-4.22%
PM growth 5Y-4.13%
GM growth 3Y1.51%
GM growth 5Y1.46%
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.
The number of shares outstanding for OTEX has been reduced compared to 1 year ago.
The number of shares outstanding for OTEX has been reduced compared to 5 years ago.
The debt/assets ratio for OTEX has been reduced compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.27, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
OTEX has a Altman-Z score (1.27) which is in line with its industry peers.
OTEX has a debt to FCF ratio of 9.01. This is a negative value and a sign of low solvency as OTEX would need 9.01 years to pay back of all of its debts.
OTEX's Debt to FCF ratio of 9.01 is fine compared to the rest of the industry. OTEX outperforms 61.90% of its industry peers.
OTEX has a Debt/Equity ratio of 1.54. This is a high value indicating a heavy dependency on external financing.
OTEX has a Debt to Equity ratio of 1.54. This is in the lower half of the industry: OTEX underperforms 69.84% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | 9.01 | ||
| Altman-Z | 1.27 |
ROIC/WACC0.65
WACC9.21%
2.3 Liquidity
A Current Ratio of 0.86 indicates that OTEX may have some problems paying its short term obligations.
With a Current ratio value of 0.86, OTEX is not doing good in the industry: 61.90% of the companies in the same industry are doing better.
OTEX has a Quick Ratio of 0.86. This is a bad value and indicates that OTEX is not financially healthy enough and could expect problems in meeting its short term obligations.
OTEX's Quick ratio of 0.86 is on the low side compared to the rest of the industry. OTEX is outperformed by 61.90% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.86 |
3. Growth
3.1 Past
OTEX shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -6.34%.
The Earnings Per Share has been growing by 8.60% on average over the past years. This is quite good.
Looking at the last year, OTEX shows a very negative growth in Revenue. The Revenue has decreased by -11.50% in the last year.
The Revenue has been growing by 15.00% on average over the past years. This is quite good.
EPS 1Y (TTM)-6.34%
EPS 3Y7.15%
EPS 5Y8.6%
EPS Q2Q%-12.77%
Revenue 1Y (TTM)-11.5%
Revenue growth 3Y19.44%
Revenue growth 5Y15%
Sales Q2Q%-13.32%
3.2 Future
The Earnings Per Share is expected to grow by 3.44% on average over the next years.
The Revenue is expected to decrease by -3.44% on average over the next years.
EPS Next Y-9.86%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
EPS Next 5YN/A
Revenue Next Year-11.58%
Revenue Next 2Y-5.56%
Revenue Next 3Y-3.44%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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
The Price/Earnings ratio is 7.45, which indicates a rather cheap valuation of OTEX.
Compared to the rest of the industry, the Price/Earnings ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 93.65% of the companies listed in the same industry.
OTEX's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.48.
OTEX is valuated cheaply with a Price/Forward Earnings ratio of 6.89.
Compared to the rest of the industry, the Price/Forward Earnings ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 92.06% of the companies listed in the same industry.
OTEX is valuated cheaply when we compare the Price/Forward Earnings ratio to 36.52, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.45 | ||
| Fwd PE | 6.89 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 88.89% of the companies listed in the same industry.
85.71% of the companies in the same industry are more expensive than OTEX, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.47 | ||
| EV/EBITDA | 7.47 |
4.3 Compensation for Growth
OTEX has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.87
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.39%, OTEX has a reasonable but not impressive dividend return.
OTEX's Dividend Yield is rather good when compared to the industry average which is at 1.67. OTEX pays more dividend than 98.41% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, OTEX pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.39% |
5.2 History
The dividend of OTEX is nicely growing with an annual growth rate of 9.59%!
OTEX has been paying a dividend for at least 10 years, so it has a reliable track record.
OTEX has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)9.59%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
41.51% of the earnings are spent on dividend by OTEX. This is a bit on the high side, but may be sustainable.
OTEX's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP41.51%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
TSX:OTEX (7/17/2025, 7:00:00 PM)
39.42
+0.61 (+1.57%)
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 Cap10.22B
Analysts76
Price Target56.19 (42.54%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.39% |
Yearly Dividend1.36
Dividend Growth(5Y)9.59%
DP41.51%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)13.28%
Min EPS beat(2)8.64%
Max EPS beat(2)17.92%
EPS beat(4)3
Avg EPS beat(4)8.63%
Min EPS beat(4)-5.46%
Max EPS beat(4)17.92%
EPS beat(8)6
Avg EPS beat(8)5.68%
EPS beat(12)9
Avg EPS beat(12)8.97%
EPS beat(16)12
Avg EPS beat(16)7.33%
Revenue beat(2)0
Avg Revenue beat(2)-2.33%
Min Revenue beat(2)-4.03%
Max Revenue beat(2)-0.63%
Revenue beat(4)0
Avg Revenue beat(4)-3.23%
Min Revenue beat(4)-5.21%
Max Revenue beat(4)-0.63%
Revenue beat(8)1
Avg Revenue beat(8)-1.99%
Revenue beat(12)3
Avg Revenue beat(12)-1.17%
Revenue beat(16)4
Avg Revenue beat(16)-0.89%
PT rev (1m)0%
PT rev (3m)-5.16%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-5.91%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.18%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.39%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.45 | ||
| Fwd PE | 6.89 | ||
| P/S | 1.42 | ||
| P/FCF | 10.47 | ||
| P/OCF | 8.65 | ||
| P/B | 1.8 | ||
| P/tB | N/A | ||
| EV/EBITDA | 7.47 |
EPS(TTM)5.29
EY13.42%
EPS(NY)5.72
Fwd EY14.52%
FCF(TTM)3.76
FCFY9.55%
OCF(TTM)4.56
OCFY11.56%
SpS27.73
BVpS21.93
TBVpS-29.04
PEG (NY)N/A
PEG (5Y)0.87
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.76% | ||
| ROE | 15.87% | ||
| ROCE | 9.07% | ||
| ROIC | 5.98% | ||
| ROICexc | 6.74% | ||
| ROICexgc | 187.89% | ||
| OM | 19.51% | ||
| PM (TTM) | 12.55% | ||
| GM | 72.3% | ||
| FCFM | 13.58% |
ROA(3y)2.69%
ROA(5y)2.72%
ROE(3y)8.22%
ROE(5y)7.62%
ROIC(3y)4.8%
ROIC(5y)5.02%
ROICexc(3y)5.58%
ROICexc(5y)6.02%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)7.28%
ROCE(5y)7.62%
ROICexcg growth 3Y91.83%
ROICexcg growth 5Y64.71%
ROICexc growth 3Y-3.34%
ROICexc growth 5Y0.03%
OM growth 3Y-6.86%
OM growth 5Y-3.35%
PM growth 3Y-4.22%
PM growth 5Y-4.13%
GM growth 3Y1.51%
GM growth 5Y1.46%
F-Score7
Asset Turnover0.38
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | 9.01 | ||
| Debt/EBITDA | 3.79 | ||
| Cap/Depr | 22.64% | ||
| Cap/Sales | 2.85% | ||
| Interest Coverage | 2.69 | ||
| Cash Conversion | 51.16% | ||
| Profit Quality | 108.15% | ||
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.86 | ||
| Altman-Z | 1.27 |
F-Score7
WACC9.21%
ROIC/WACC0.65
Cap/Depr(3y)19.01%
Cap/Depr(5y)16.68%
Cap/Sales(3y)2.73%
Cap/Sales(5y)2.48%
Profit Quality(3y)277.81%
Profit Quality(5y)294.29%
High Growth Momentum
Growth
EPS 1Y (TTM)-6.34%
EPS 3Y7.15%
EPS 5Y8.6%
EPS Q2Q%-12.77%
EPS Next Y-9.86%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
EPS Next 5YN/A
Revenue 1Y (TTM)-11.5%
Revenue growth 3Y19.44%
Revenue growth 5Y15%
Sales Q2Q%-13.32%
Revenue Next Year-11.58%
Revenue Next 2Y-5.56%
Revenue Next 3Y-3.44%
Revenue Next 5YN/A
EBIT growth 1Y4.68%
EBIT growth 3Y11.24%
EBIT growth 5Y11.15%
EBIT Next Year-6.41%
EBIT Next 3Y1.99%
EBIT Next 5YN/A
FCF growth 1Y-8.9%
FCF growth 3Y-0.17%
FCF growth 5Y-0.1%
OCF growth 1Y-6.35%
OCF growth 3Y3.37%
OCF growth 5Y2%