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 283 industry peers in the Software industry. While OTEX has a great profitability rating, there are quite some concerns on its financial health. OTEX is valued quite cheap, but it does not seem to be growing. 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.
In the past 5 years OTEX always reported a positive cash flow from operatings.
1.2 Ratios
OTEX's Return On Assets of 4.76% is fine compared to the rest of the industry. OTEX outperforms 73.85% of its industry peers.
The Return On Equity of OTEX (15.87%) is better than 82.33% of its industry peers.
OTEX has a better Return On Invested Capital (5.98%) than 76.68% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for OTEX is significantly below the industry average of 12.42%.
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 is in the better half of the industry, outperforming 77.74% of the companies in the same industry.
OTEX's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 19.51%, OTEX belongs to the best of the industry, outperforming 86.57% of the companies in the same industry.
In the last couple of years the Operating Margin of OTEX has declined.
With a decent Gross Margin value of 72.30%, OTEX is doing good in the industry, outperforming 62.19% of the companies in the same industry.
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
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 an improved debt to assets ratio.
2.2 Solvency
OTEX has an Altman-Z score of 1.27. This is a bad value and indicates that OTEX is not financially healthy and even has some risk of bankruptcy.
OTEX has a worse Altman-Z score (1.27) than 60.07% of its industry peers.
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.
Looking at the Debt to FCF ratio, with a value of 9.01, OTEX is in line with its industry, outperforming 50.18% of the companies in the same industry.
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 78.45% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | 9.01 | ||
| Altman-Z | 1.27 |
ROIC/WACC0.65
WACC9.22%
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 79.86% 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 79.51% 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.
OTEX shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.60% yearly.
The Revenue for OTEX has decreased by -11.50% 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 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
The Earnings Per Share is expected to grow by 3.44% on average over the next years.
OTEX is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -3.44% yearly.
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
OTEX is valuated cheaply with a Price/Earnings ratio of 7.33.
Based on the Price/Earnings ratio, OTEX is valued cheaper than 93.64% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.68. OTEX is valued rather cheaply when compared to this.
OTEX is valuated cheaply with a Price/Forward Earnings ratio of 6.77.
95.76% of the companies in the same industry are more expensive than OTEX, based on the Price/Forward Earnings ratio.
OTEX is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.50, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.33 | ||
| Fwd PE | 6.77 |
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 94.35% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, OTEX is valued cheaply inside the industry as 93.99% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.48 | ||
| EV/EBITDA | 7.48 |
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)0.85
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.47%, OTEX has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 14.23, OTEX pays a better dividend. On top of this OTEX pays more dividend than 97.88% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, OTEX pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.47% |
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
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%
28.14
+0.17 (+0.61%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners77.19%
Inst Owner Change2.93%
Ins Owners2.04%
Ins Owner ChangeN/A
Market Cap7.43B
Analysts78
Price Target42.95 (52.63%)
Short Float %3.17%
Short Ratio5.54
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.47% |
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)4.22%
PT rev (3m)4.22%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-5.48%
EPS NY rev (1m)0%
EPS NY rev (3m)1.2%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-4.7%
Revenue NY rev (1m)-1.26%
Revenue NY rev (3m)-3.09%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.33 | ||
| Fwd PE | 6.77 | ||
| P/S | 1.42 | ||
| P/FCF | 10.48 | ||
| P/OCF | 8.66 | ||
| P/B | 1.8 | ||
| P/tB | N/A | ||
| EV/EBITDA | 7.48 |
EPS(TTM)3.84
EY13.65%
EPS(NY)4.16
Fwd EY14.78%
FCF(TTM)2.68
FCFY9.54%
OCF(TTM)3.25
OCFY11.54%
SpS19.77
BVpS15.64
TBVpS-20.71
PEG (NY)N/A
PEG (5Y)0.85
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
WACC9.22%
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-5.63%
EBIT Next 3Y1.57%
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%