OPEN TEXT CORP (OTEX) Stock Fundamental Analysis
USA - NASDAQ:OTEX - CA6837151068 - Common Stock
39.35 USD
+0.32 (+0.82%)
39.35 USD
0 (0%)
Overall OTEX gets a fundamental rating of 5 out of 10. We evaluated OTEX against 285 industry peers in the Software industry. While OTEX has a great profitability rating, there are quite some concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on OTEX.
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.
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 67.48% of its industry peers.
With a decent Return On Equity value of 11.09%, OTEX is doing good in the industry, outperforming 78.32% of the companies in the same industry.
OTEX has a better Return On Invested Capital (7.26%) than 76.57% 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 11.88%.
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
OTEX's Profit Margin of 8.43% is fine compared to the rest of the industry. OTEX outperforms 70.63% of its industry peers.
In the last couple of years the Profit Margin of OTEX has grown nicely.
With an excellent Operating Margin value of 20.09%, OTEX belongs to the best of the industry, outperforming 86.36% of the companies in the same industry.
OTEX's Operating Margin has been stable in the last couple of years.
Looking at the Gross Margin, with a value of 72.25%, OTEX is in line with its industry, outperforming 59.09% 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 | 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
OTEX has less shares outstanding than it did 5 years ago.
OTEX has a worse debt/assets ratio than last year.
2.2 Solvency
OTEX has an Altman-Z score of 1.38. This is a bad value and indicates that OTEX is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 1.38, OTEX is not doing good in the industry: 60.49% of the companies in the same industry are doing better.
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's Debt to FCF ratio of 9.28 is in line compared to the rest of the industry. OTEX outperforms 52.10% 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's Debt to Equity ratio of 1.61 is on the low side compared to the rest of the industry. OTEX is outperformed by 79.02% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.61 | ||
| Debt/FCF | 9.28 | ||
| Altman-Z | 1.38 |
ROIC/WACC0.73
WACC9.98%
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.
Looking at the Current ratio, with a value of 0.80, OTEX is doing worse than 80.42% of the companies in the same industry.
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: 80.07% 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
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
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)-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 Y9.99%
EPS Next 2Y9.19%
EPS Next 3Y7.42%
EPS Next 5YN/A
Revenue Next Year1.66%
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
With a Price/Earnings ratio of 10.27, the valuation of OTEX can be described as very reasonable.
Based on the Price/Earnings ratio, OTEX is valued cheaper than 90.21% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.89. OTEX is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 9.34, the valuation of OTEX can be described as very reasonable.
91.61% 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 22.99, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.27 | ||
| Fwd PE | 9.34 |
4.2 Price Multiples
OTEX's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. OTEX is cheaper than 91.96% of the companies in the same industry.
89.16% of the companies in the same industry are more expensive than OTEX, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.56 | ||
| EV/EBITDA | 9.07 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
OTEX has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.03
PEG (5Y)1.77
EPS Next 2Y9.19%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
OTEX has a Yearly Dividend Yield of 2.48%.
Compared to an average industry Dividend Yield of 34.34, OTEX pays a better dividend. On top of this OTEX pays more dividend than 96.15% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.31, OTEX has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.48% |
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 their dividend for at least 10 years, which is a reliable track record.
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 2Y9.19%
EPS Next 3Y7.42%
39.35
+0.32 (+0.82%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.71%
Inst Owner Change-0.15%
Ins Owners2.08%
Ins Owner ChangeN/A
Market Cap10.01B
Revenue(TTM)5.17B
Net Income(TTM)435.87M
Analysts78
Price Target45.08 (14.56%)
Short Float %4.18%
Short Ratio7.61
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.48% |
Yearly Dividend1.04
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)10.99%
PT rev (3m)10.07%
EPS NQ rev (1m)0.24%
EPS NQ rev (3m)9.52%
EPS NY rev (1m)0%
EPS NY rev (3m)1.31%
Revenue NQ rev (1m)-0.08%
Revenue NQ rev (3m)1.96%
Revenue NY rev (1m)-0.11%
Revenue NY rev (3m)0.78%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.27 | ||
| Fwd PE | 9.34 | ||
| P/S | 1.94 | ||
| P/FCF | 14.56 | ||
| P/OCF | 12.05 | ||
| P/B | 2.55 | ||
| P/tB | N/A | ||
| EV/EBITDA | 9.07 |
EPS(TTM)3.83
EY9.73%
EPS(NY)4.21
Fwd EY10.71%
FCF(TTM)2.7
FCFY6.87%
OCF(TTM)3.27
OCFY8.3%
SpS20.32
BVpS15.45
TBVpS-21.88
PEG (NY)1.03
PEG (5Y)1.77
Graham Number36.49
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%
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 | 1.38 |
F-Score4
WACC9.98%
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)-8.15%
EPS 3Y5.95%
EPS 5Y5.79%
EPS Q2Q%-1.02%
EPS Next Y9.99%
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 Year1.66%
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 FAQ
What is the ChartMill fundamental rating of OPEN TEXT CORP (OTEX) stock?
ChartMill assigns a fundamental rating of 5 / 10 to OTEX.
Can you provide the valuation status for OPEN TEXT CORP?
ChartMill assigns a valuation rating of 8 / 10 to OPEN TEXT CORP (OTEX). This can be considered as Undervalued.
What is the profitability of OTEX stock?
OPEN TEXT CORP (OTEX) has a profitability rating of 7 / 10.
What is the expected EPS growth for OPEN TEXT CORP (OTEX) stock?
The Earnings per Share (EPS) of OPEN TEXT CORP (OTEX) is expected to grow by 9.99% in the next year.
Is the dividend of OPEN TEXT CORP sustainable?
The dividend rating of OPEN TEXT CORP (OTEX) is 6 / 10 and the dividend payout ratio is 62.29%.