OPEN TEXT CORP (OTEX.CA) Stock Fundamental Analysis
Canada - TSX:OTEX - CA6837151068 - Common Stock
48.96 CAD
+0.25 (+0.51%)
We assign a fundamental rating of 5 out of 10 to OTEX. OTEX was compared to 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, while showing a decent growth score. This is a good combination!
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.
OTEX had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
OTEX has a Return On Assets of 3.16%. This is in the better half of the industry: OTEX outperforms 66.67% of its industry peers.
OTEX has a better Return On Equity (11.09%) than 79.37% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.26%, OTEX is in the better half of the industry, outperforming 74.60% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for OTEX is significantly below the industry average of 12.38%.
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
The Profit Margin of OTEX (8.43%) is better than 80.95% of its industry peers.
In the last couple of years the Profit Margin of OTEX has grown nicely.
OTEX's Operating Margin of 20.09% is amongst the best of the industry. OTEX outperforms 88.89% of its industry peers.
OTEX's Operating Margin has been stable in the last couple of years.
OTEX's Gross Margin of 72.25% is fine compared to the rest of the industry. OTEX outperforms 73.02% of its industry peers.
In the last couple of years the Gross Margin of OTEX has remained more or less at the same level.
| 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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so OTEX is destroying value.
Compared to 1 year ago, OTEX has less shares outstanding
Compared to 5 years ago, OTEX has less shares outstanding
Compared to 1 year ago, OTEX has a worse debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.31, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
With a Altman-Z score value of 1.31, OTEX perfoms like the industry average, outperforming 42.86% 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 Debt to FCF ratio of 9.28. This is in the better half of the industry: OTEX outperforms 63.49% of its industry peers.
A Debt/Equity ratio of 1.61 is on the high side and indicates that OTEX has dependencies on debt financing.
OTEX has a worse Debt to Equity ratio (1.61) than 69.84% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.61 | ||
| Debt/FCF | 9.28 | ||
| Altman-Z | 1.31 |
ROIC/WACC0.73
WACC9.89%
2.3 Liquidity
OTEX has a Current Ratio of 0.80. 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 has a Current ratio of 0.80. This is in the lower half of the industry: OTEX underperforms 66.67% of its industry peers.
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: 65.08% 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
The earnings per share for OTEX have decreased by -3.42% in the last year.
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.
Looking at the last year, OTEX shows a very negative growth in Revenue. The Revenue has decreased by -10.42% in the last year.
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)-3.42%
EPS 3Y5.95%
EPS 5Y5.79%
EPS Q2Q%12.9%
Revenue 1Y (TTM)-10.42%
Revenue growth 3Y13.94%
Revenue growth 5Y10.69%
Sales Q2Q%1.51%
3.2 Future
Based on estimates for the next years, OTEX will show a small growth in Earnings Per Share. The EPS will grow by 7.42% on average per year.
OTEX is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.54% yearly.
EPS Next Y9.76%
EPS Next 2Y9.3%
EPS Next 3Y7.42%
EPS Next 5YN/A
Revenue Next Year1.62%
Revenue Next 2Y1.69%
Revenue Next 3Y1.56%
Revenue Next 5Y4.54%
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 accelerating.
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
Based on the Price/Earnings ratio of 8.85, the valuation of OTEX can be described as reasonable.
OTEX's Price/Earnings ratio is rather cheap when compared to the industry. OTEX is cheaper than 95.24% of the companies in the same industry.
OTEX is valuated cheaply when we compare the Price/Earnings ratio to 26.35, which is the current average of the S&P500 Index.
OTEX is valuated cheaply with a Price/Forward Earnings ratio of 7.64.
Compared to the rest of the industry, the Price/Forward Earnings ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 88.89% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of OTEX to the average of the S&P500 Index (33.72), we can say OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.85 | ||
| Fwd PE | 7.64 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of OTEX indicates a somewhat cheap valuation: OTEX is cheaper than 77.78% of the companies listed in the same industry.
OTEX's Price/Free Cash Flow ratio is rather cheap when compared to the industry. OTEX is cheaper than 84.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 12.93 | ||
| EV/EBITDA | 8.37 |
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)0.91
PEG (5Y)1.53
EPS Next 2Y9.3%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.67%, 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 1.51. OTEX pays more dividend than 98.41% of the companies in the same industry.
OTEX's Dividend Yield is comparable with the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
5.2 History
The dividend of OTEX is nicely growing with an annual growth rate of 8.34%!
OTEX has paid a dividend for at least 10 years, which is a reliable track record.
OTEX has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)8.34%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
62.29% of the earnings are spent on dividend by OTEX. 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 2Y9.3%
EPS Next 3Y7.42%
TSX:OTEX (11/11/2025, 7:00:00 PM)
48.96
+0.25 (+0.51%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.71%
Inst Owner ChangeN/A
Ins Owners2.08%
Ins Owner ChangeN/A
Market Cap12.45B
Revenue(TTM)5.17B
Net Income(TTM)435.87M
Analysts78
Price Target62.82 (28.31%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
Yearly Dividend1.47
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)11.8%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)9.84%
EPS NY rev (1m)-0.21%
EPS NY rev (3m)1.1%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.96%
Revenue NY rev (1m)-0.04%
Revenue NY rev (3m)0.74%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.85 | ||
| Fwd PE | 7.64 | ||
| P/S | 1.72 | ||
| P/FCF | 12.93 | ||
| P/OCF | 10.7 | ||
| P/B | 2.26 | ||
| P/tB | N/A | ||
| EV/EBITDA | 8.37 |
EPS(TTM)5.53
EY11.29%
EPS(NY)6.41
Fwd EY13.09%
FCF(TTM)3.79
FCFY7.74%
OCF(TTM)4.58
OCFY9.35%
SpS28.48
BVpS21.65
TBVpS-30.66
PEG (NY)0.91
PEG (5Y)1.53
Graham Number51.9
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%
ROICexgc growth 3Y40.72%
ROICexgc 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 | 1.31 |
F-Score4
WACC9.89%
ROIC/WACC0.73
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)-3.42%
EPS 3Y5.95%
EPS 5Y5.79%
EPS Q2Q%12.9%
EPS Next Y9.76%
EPS Next 2Y9.3%
EPS Next 3Y7.42%
EPS Next 5YN/A
Revenue 1Y (TTM)-10.42%
Revenue growth 3Y13.94%
Revenue growth 5Y10.69%
Sales Q2Q%1.51%
Revenue Next Year1.62%
Revenue Next 2Y1.69%
Revenue Next 3Y1.56%
Revenue Next 5Y4.54%
EBIT growth 1Y1.58%
EBIT growth 3Y14.51%
EBIT growth 5Y11.45%
EBIT Next Year14.64%
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%
OPEN TEXT CORP / OTEX.CA FAQ
What is the ChartMill fundamental rating of OPEN TEXT CORP (OTEX.CA) stock?
ChartMill assigns a fundamental rating of 5 / 10 to OTEX.CA.
Can you provide the valuation status for OPEN TEXT CORP?
ChartMill assigns a valuation rating of 8 / 10 to OPEN TEXT CORP (OTEX.CA). This can be considered as Undervalued.
What is the profitability of OTEX stock?
OPEN TEXT CORP (OTEX.CA) has a profitability rating of 7 / 10.
What is the expected EPS growth for OPEN TEXT CORP (OTEX.CA) stock?
The Earnings per Share (EPS) of OPEN TEXT CORP (OTEX.CA) is expected to grow by 9.76% in the next year.
Is the dividend of OPEN TEXT CORP sustainable?
The dividend rating of OPEN TEXT CORP (OTEX.CA) is 6 / 10 and the dividend payout ratio is 62.29%.