OPEN TEXT CORP (OTEX.CA) Stock Fundamental Analysis
TSX:OTEX - CA6837151068 - Common Stock
45.42 CAD
+0.06 (+0.13%)
OTEX gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 63 industry peers in the Software industry. OTEX has an excellent profitability rating, 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.
In the past year OTEX had a positive cash flow from operations.
In the past 5 years OTEX has always been profitable.
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 65.08% of its industry peers.
OTEX has a better Return On Equity (11.09%) than 77.78% of its industry peers.
OTEX has a Return On Invested Capital of 7.26%. This is in the better half of the industry: OTEX outperforms 76.19% of its industry peers.
OTEX had an Average Return On Invested Capital over the past 3 years of 6.00%. This is significantly below the industry average of 12.21%.
The 3 year average ROIC (6.00%) for OTEX is below the current ROIC(7.26%), indicating increased profibility in the last year.
| 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 82.54% of its industry peers.
In the last couple of years the Profit Margin of OTEX has grown nicely.
The Operating Margin of OTEX (20.09%) is better than 90.48% 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.
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), OTEX is destroying value.
The number of shares outstanding for OTEX has been reduced compared to 1 year ago.
Compared to 5 years ago, OTEX has less shares outstanding
OTEX has a worse debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.29, 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 1.29, OTEX is in line with its industry, outperforming 47.62% of the companies in the same industry.
OTEX has a debt to FCF ratio of 9.28. This is a negative value and a sign of low solvency as OTEX would need 9.28 years to pay back of 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 61.90% 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 | 1.29 |
ROIC/WACC0.71
WACC10.24%
2.3 Liquidity
A Current Ratio of 0.80 indicates that OTEX may have some problems paying its short term obligations.
The Current ratio of OTEX (0.80) is worse than 63.49% of its industry peers.
A Quick Ratio of 0.80 indicates that OTEX may have some problems paying its short term obligations.
OTEX has a Quick ratio of 0.80. This is in the lower half of the industry: OTEX underperforms 63.49% of its industry peers.
| 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.
The Revenue for OTEX has decreased by -10.42% in the past year. This is quite bad
Measured over the past years, OTEX shows a quite strong growth in Revenue. The Revenue has been growing by 10.69% on average per year.
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 8.62, the valuation of OTEX can be described as very reasonable.
Based on the Price/Earnings ratio, OTEX is valued cheaply inside the industry as 93.65% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of OTEX to the average of the S&P500 Index (27.13), we can say OTEX is valued rather cheaply.
The Price/Forward Earnings ratio is 7.83, which indicates a rather cheap valuation of OTEX.
Based on the Price/Forward Earnings ratio, OTEX is valued cheaply inside the industry as 90.48% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 22.76. OTEX is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.62 | ||
| Fwd PE | 7.83 |
4.2 Price Multiples
82.54% of the companies in the same industry are more expensive than OTEX, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 82.54% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 12.22 | ||
| EV/EBITDA | 8.11 |
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)0.84
PEG (5Y)1.49
EPS Next 2Y9.19%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
OTEX has a Yearly Dividend Yield of 2.98%.
Compared to an average industry Dividend Yield of 1.42, OTEX pays a better dividend. On top of this OTEX pays more dividend than 98.41% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.32, OTEX pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.98% |
5.2 History
On average, the dividend of OTEX grows each year by 9.59%, 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)9.59%
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.
OTEX's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP62.29%
EPS Next 2Y9.19%
EPS Next 3Y7.42%
TSX:OTEX (8/29/2025, 7:00:00 PM)
45.42
+0.06 (+0.13%)
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 Cap11.55B
Analysts76
Price Target56.19 (23.71%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.98% |
Yearly Dividend1.36
Dividend Growth(5Y)9.59%
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)-5.16%
EPS NQ rev (1m)9.26%
EPS NQ rev (3m)5.73%
EPS NY rev (1m)1.51%
EPS NY rev (3m)1.51%
Revenue NQ rev (1m)2.04%
Revenue NQ rev (3m)-2.47%
Revenue NY rev (1m)0.89%
Revenue NY rev (3m)0.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.62 | ||
| Fwd PE | 7.83 | ||
| P/S | 1.63 | ||
| P/FCF | 12.22 | ||
| P/OCF | 10.11 | ||
| P/B | 2.14 | ||
| P/tB | N/A | ||
| EV/EBITDA | 8.11 |
EPS(TTM)5.27
EY11.6%
EPS(NY)5.8
Fwd EY12.78%
FCF(TTM)3.72
FCFY8.18%
OCF(TTM)4.49
OCFY9.89%
SpS27.95
BVpS21.24
TBVpS-30.09
PEG (NY)0.84
PEG (5Y)1.49
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 | 1.29 |
F-Score4
WACC10.24%
ROIC/WACC0.71
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%