OPEN TEXT CORP (OTEX) Stock Fundamental Analysis
NASDAQ:OTEX - Nasdaq - CA6837151068 - Common Stock - Currency: USD
Taking everything into account, OTEX scores 5 out of 10 in our fundamental rating. OTEX was compared to 284 industry peers in the Software industry. While OTEX belongs to the best of the industry regarding profitability, there are concerns on its financial health. OTEX is cheap, but on the other hand it scores bad on growth. 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.
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 75.35% of its industry peers.
Looking at the Return On Equity, with a value of 15.87%, OTEX belongs to the top of the industry, outperforming 83.10% 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 77.46% of its industry peers.
The Average Return On Invested Capital over the past 3 years for OTEX is significantly below the industry average of 12.33%.
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
The Profit Margin of OTEX (12.55%) is better than 78.52% of its industry peers.
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 86.62% of the companies in the same industry.
OTEX's Operating Margin has declined in the last couple of years.
OTEX has a Gross Margin of 72.30%. This is in the better half of the industry: OTEX outperforms 60.21% 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 | 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.
OTEX has less shares outstanding than it did 1 year ago.
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.
With a Altman-Z score value of 1.26, OTEX perfoms like the industry average, outperforming 40.49% of the companies in the same 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 has a Debt to FCF ratio (9.01) which is in line with 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 77.82% 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
A Current Ratio of 0.86 indicates that OTEX may have some problems paying its short term obligations.
OTEX has a Current ratio of 0.86. This is in the lower half of the industry: OTEX underperforms 79.58% of its industry peers.
A Quick Ratio of 0.86 indicates that OTEX may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.86, OTEX is doing worse than 78.87% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.86 |
3. Growth
3.1 Past
The earnings per share for OTEX have decreased by -6.34% in the last year.
The Earnings Per Share has been growing by 8.60% on average over the past years. This is quite good.
OTEX shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -11.50%.
OTEX shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 15.00% yearly.
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.
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
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 7.43 indicates a rather cheap valuation of OTEX.
OTEX's Price/Earnings ratio is rather cheap when compared to the industry. OTEX is cheaper than 94.72% of the companies in the same industry.
OTEX is valuated cheaply when we compare the Price/Earnings ratio to 26.57, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 6.86 indicates a rather cheap valuation of OTEX.
95.07% of the companies in the same industry are more expensive than OTEX, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of OTEX to the average of the S&P500 Index (22.41), we can say OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.43 | ||
| Fwd PE | 6.86 |
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 94.01% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 94.37% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.43 | ||
| EV/EBITDA | 7.41 |
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)0.86
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
5. Dividend
5.1 Amount
OTEX has a Yearly Dividend Yield of 3.43%. Purely for dividend investing, there may be better candidates out there.
OTEX's Dividend Yield is rather good when compared to the industry average which is at 16.42. OTEX pays more dividend than 97.89% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, OTEX pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.43% |
5.2 History
The dividend of OTEX is nicely growing with an annual growth rate of 9.59%!
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)9.59%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
OTEX pays out 41.51% of its income as dividend. 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%
28.52
+0.26 (+0.92%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.68%
Inst Owner Change2.88%
Ins Owners2.13%
Ins Owner ChangeN/A
Market Cap7.39B
Analysts76
Price Target40.94 (43.55%)
Short Float %3.18%
Short Ratio6.46
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.43% |
Yearly Dividend0.99
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)-4.69%
PT rev (3m)-0.03%
EPS NQ rev (1m)-5.91%
EPS NQ rev (3m)-5.91%
EPS NY rev (1m)0%
EPS NY rev (3m)0.06%
Revenue NQ rev (1m)-2.39%
Revenue NQ rev (3m)-2.39%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.43 | ||
| Fwd PE | 6.86 | ||
| P/S | 1.42 | ||
| P/FCF | 10.43 | ||
| P/OCF | 8.62 | ||
| P/B | 1.79 | ||
| P/tB | N/A | ||
| EV/EBITDA | 7.41 |
EPS(TTM)3.84
EY13.46%
EPS(NY)4.16
Fwd EY14.58%
FCF(TTM)2.73
FCFY9.59%
OCF(TTM)3.31
OCFY11.6%
SpS20.14
BVpS15.93
TBVpS-21.1
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%