OPEN TEXT CORP (OTEX.CA) Stock Fundamental Analysis
TSX:OTEX - Toronto Stock Exchange - CA6837151068 - Common Stock - Currency: CAD
We assign a fundamental rating of 5 out of 10 to OTEX. OTEX was compared to 61 industry peers in the Software industry. While OTEX has a great profitability rating, there are quite some concerns on its financial health. OTEX has a bad growth rate and is valued cheaply. OTEX also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
OTEX had positive earnings in the past year.
In the past year OTEX had a positive cash flow from operations.
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
With a decent Return On Assets value of 4.76%, OTEX is doing good in the industry, outperforming 70.49% of the companies in the same industry.
OTEX has a Return On Equity of 15.87%. This is in the better half of the industry: OTEX outperforms 78.69% of its industry peers.
The Return On Invested Capital of OTEX (5.98%) is better than 72.13% of its industry peers.
The Average Return On Invested Capital over the past 3 years for OTEX is significantly below the industry average of 12.40%.
The last Return On Invested Capital (5.98%) for OTEX is above the 3 year average (4.80%), which is a sign of increasing profitability.
| 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
The Profit Margin of OTEX (12.55%) is better than 85.25% of its industry peers.
OTEX's Profit Margin has declined in the last couple of years.
The Operating Margin of OTEX (19.51%) is better than 91.80% of its industry peers.
OTEX's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 72.30%, OTEX is in the better half of the industry, outperforming 75.41% 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 | 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.
Compared to 1 year ago, OTEX has less shares outstanding
OTEX has less shares outstanding than it did 5 years ago.
OTEX has a better debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.26, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of OTEX (1.26) is comparable to the rest of the industry.
The Debt to FCF ratio of OTEX is 9.01, which is on the high side as it means it would take OTEX, 9.01 years of fcf income to pay off all of its debts.
OTEX's Debt to FCF ratio of 9.01 is in line compared to the rest of the industry. OTEX outperforms 59.02% 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.
Looking at the Debt to Equity ratio, with a value of 1.54, OTEX is doing worse than 70.49% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | 9.01 | ||
| Altman-Z | 1.26 |
ROIC/WACC0.81
WACC7.34%
2.3 Liquidity
OTEX has a Current 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 has a Current ratio of 0.86. This is in the lower half of the industry: OTEX underperforms 63.93% of its industry peers.
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.
Looking at the Quick ratio, with a value of 0.86, OTEX is doing worse than 63.93% of the companies in the same industry.
| 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%.
OTEX shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.60% yearly.
Looking at the last year, OTEX shows a very negative growth in Revenue. The Revenue has decreased by -11.50% in the last year.
Measured over the past years, OTEX shows a quite strong growth in Revenue. The Revenue has been growing by 15.00% on average per year.
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
OTEX is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.44% yearly.
Based on estimates for the next years, OTEX will show a decrease in Revenue. The Revenue will decrease by -3.44% on average per year.
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
The EPS growth rate is decreasing: in the next years the growth will be less 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 7.41, the valuation of OTEX can be described as very cheap.
Compared to the rest of the industry, the Price/Earnings ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 95.08% 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 26.34.
With a Price/Forward Earnings ratio of 6.84, the valuation of OTEX can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 91.80% of the companies listed in the same industry.
OTEX is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.19, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.41 | ||
| Fwd PE | 6.84 |
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 81.97% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, OTEX is valued cheaply inside the industry as 86.89% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.4 | ||
| EV/EBITDA | 7.44 |
4.3 Compensation for Growth
The decent profitability rating of OTEX may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.86
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.43%, OTEX has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.72, OTEX pays a better dividend. On top of this OTEX pays more dividend than 98.36% of the companies listed in the same industry.
OTEX's Dividend Yield is a higher than the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.43% |
5.2 History
On average, the dividend of OTEX grows each year by 9.59%, which is quite nice.
OTEX has been paying a dividend for at least 10 years, so it has 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)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 (6/18/2025, 7:00:00 PM)
38.84
+0.22 (+0.57%)
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 Cap10.06B
Analysts76
Price Target56.19 (44.67%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.43% |
Yearly Dividend1.35
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)-5.16%
PT rev (3m)-5.16%
EPS NQ rev (1m)-5.91%
EPS NQ rev (3m)-11.07%
EPS NY rev (1m)0%
EPS NY rev (3m)0.06%
Revenue NQ rev (1m)-2.39%
Revenue NQ rev (3m)-6.98%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.41 | ||
| Fwd PE | 6.84 | ||
| P/S | 1.41 | ||
| P/FCF | 10.4 | ||
| P/OCF | 8.59 | ||
| P/B | 1.79 | ||
| P/tB | N/A | ||
| EV/EBITDA | 7.44 |
EPS(TTM)5.24
EY13.49%
EPS(NY)5.68
Fwd EY14.62%
FCF(TTM)3.73
FCFY9.61%
OCF(TTM)4.52
OCFY11.64%
SpS27.51
BVpS21.76
TBVpS-28.81
PEG (NY)N/A
PEG (5Y)0.86
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 | 1.26 |
F-Score7
WACC7.34%
ROIC/WACC0.81
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%