OPEN TEXT CORP (OTEX.CA) Stock Fundamental Analysis
TSX:OTEX - Toronto Stock Exchange - CA6837151068 - Common Stock - Currency: CAD
Taking everything into account, OTEX scores 5 out of 10 in our fundamental rating. OTEX was compared to 63 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.
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 has a better Return On Assets (4.81%) than 69.84% of its industry peers.
Looking at the Return On Equity, with a value of 15.62%, OTEX is in the better half of the industry, outperforming 79.37% of the companies in the same industry.
OTEX has a Return On Invested Capital of 6.12%. This is in the better half of the industry: OTEX outperforms 74.60% 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 13.62%.
The last Return On Invested Capital (6.12%) for OTEX is above the 3 year average (4.80%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.81% | ||
| ROE | 15.62% | ||
| ROIC | 6.12% |
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
OTEX's Profit Margin of 12.21% is amongst the best of the industry. OTEX outperforms 80.95% of its industry peers.
OTEX's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 19.44%, OTEX belongs to the best of the industry, outperforming 92.06% of the companies in the same industry.
OTEX's Operating Margin has declined in the last couple of years.
With a decent Gross Margin value of 72.64%, OTEX is doing good in the industry, outperforming 74.60% 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 | 19.44% | ||
| PM (TTM) | 12.21% | ||
| GM | 72.64% |
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), OTEX is destroying value.
Compared to 1 year ago, OTEX has less shares outstanding
The number of shares outstanding for OTEX has been reduced compared to 5 years ago.
The debt/assets ratio for OTEX has been reduced compared to a year ago.
2.2 Solvency
OTEX has an Altman-Z score of 1.29. This is a bad value and indicates that OTEX is not financially healthy and even has some risk of bankruptcy.
OTEX has a Altman-Z score of 1.29. This is comparable to the rest of the industry: OTEX outperforms 53.97% of its industry peers.
OTEX has a debt to FCF ratio of 9.35. This is a negative value and a sign of low solvency as OTEX would need 9.35 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 9.35, OTEX is in line with its industry, outperforming 58.73% of the companies in the same industry.
A Debt/Equity ratio of 1.50 is on the high side and indicates that OTEX has dependencies on debt financing.
OTEX has a worse Debt to Equity ratio (1.50) than 69.84% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.5 | ||
| Debt/FCF | 9.35 | ||
| Altman-Z | 1.29 |
ROIC/WACC0.68
WACC8.98%
2.3 Liquidity
A Current Ratio of 0.87 indicates that OTEX may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.87, OTEX is doing worse than 61.90% of the companies in the same industry.
A Quick Ratio of 0.87 indicates that OTEX may have some problems paying its short term obligations.
OTEX's Quick ratio of 0.87 is on the low side compared to the rest of the industry. OTEX is outperformed by 61.90% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
OTEX shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 1.80%.
The Earnings Per Share has been growing by 8.60% on average over the past years. This is quite good.
OTEX shows a decrease in Revenue. In the last year, the revenue decreased by -4.97%.
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)1.8%
EPS 3Y7.15%
EPS 5Y8.6%
EPS Q2Q%-10.48%
Revenue 1Y (TTM)-4.97%
Revenue growth 3Y19.44%
Revenue growth 5Y15%
Sales Q2Q%-13.05%
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 -2.34% yearly.
EPS Next Y-9.86%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
EPS Next 5YN/A
Revenue Next Year-10.47%
Revenue Next 2Y-4.37%
Revenue Next 3Y-2.34%
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.
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
Based on the Price/Earnings ratio of 6.81, the valuation of OTEX can be described as very cheap.
92.06% of the companies in the same industry are more expensive than OTEX, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 28.78. OTEX is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 6.49, the valuation of OTEX can be described as very cheap.
95.24% of the companies in the same industry are more expensive than OTEX, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.32, OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 6.81 | ||
| Fwd PE | 6.49 |
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 82.54% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, OTEX is valued cheaply inside the industry as 87.30% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.42 | ||
| EV/EBITDA | 7.15 |
4.3 Compensation for Growth
The decent profitability rating of OTEX may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.79
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.64%, OTEX has a reasonable but not impressive dividend return.
OTEX's Dividend Yield is rather good when compared to the industry average which is at 1.87. OTEX pays more dividend than 98.41% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.46, OTEX pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.64% |
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 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
41.07% of the earnings are spent on dividend by OTEX. This is a bit on the high side, but may be sustainable.
The dividend of OTEX is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP41.07%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
TSX:OTEX (4/25/2025, 7:00:00 PM)
37.41
+0.21 (+0.56%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners77.19%
Inst Owner ChangeN/A
Ins Owners2.04%
Ins Owner ChangeN/A
Market Cap9.88B
Analysts78
Price Target59.25 (58.38%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.64% |
Yearly Dividend1.38
Dividend Growth(5Y)9.59%
DP41.07%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)15.68%
Min EPS beat(2)13.44%
Max EPS beat(2)17.92%
EPS beat(4)2
Avg EPS beat(4)6.12%
Min EPS beat(4)-5.46%
Max EPS beat(4)17.92%
EPS beat(8)6
Avg EPS beat(8)10.96%
EPS beat(12)9
Avg EPS beat(12)8.49%
EPS beat(16)12
Avg EPS beat(16)7.16%
Revenue beat(2)0
Avg Revenue beat(2)-1.84%
Min Revenue beat(2)-3.06%
Max Revenue beat(2)-0.63%
Revenue beat(4)0
Avg Revenue beat(4)-2.51%
Min Revenue beat(4)-5.21%
Max Revenue beat(4)-0.63%
Revenue beat(8)2
Avg Revenue beat(8)-1.06%
Revenue beat(12)3
Avg Revenue beat(12)-1.02%
Revenue beat(16)5
Avg Revenue beat(16)-0.62%
PT rev (1m)0%
PT rev (3m)0%
EPS NQ rev (1m)-1.11%
EPS NQ rev (3m)-13.95%
EPS NY rev (1m)-0.18%
EPS NY rev (3m)1.1%
Revenue NQ rev (1m)-0.08%
Revenue NQ rev (3m)-3.68%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)-1.87%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 6.81 | ||
| Fwd PE | 6.49 | ||
| P/S | 1.32 | ||
| P/FCF | 10.42 | ||
| P/OCF | 8.47 | ||
| P/B | 1.68 | ||
| P/tB | N/A | ||
| EV/EBITDA | 7.15 |
EPS(TTM)5.49
EY14.68%
EPS(NY)5.77
Fwd EY15.42%
FCF(TTM)3.59
FCFY9.59%
OCF(TTM)4.41
OCFY11.8%
SpS28.44
BVpS22.23
TBVpS-28.81
PEG (NY)N/A
PEG (5Y)0.79
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.81% | ||
| ROE | 15.62% | ||
| ROCE | 9.29% | ||
| ROIC | 6.12% | ||
| ROICexc | 6.79% | ||
| ROICexgc | 139.82% | ||
| OM | 19.44% | ||
| PM (TTM) | 12.21% | ||
| GM | 72.64% | ||
| FCFM | 12.62% |
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-Score8
Asset Turnover0.39
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.5 | ||
| Debt/FCF | 9.35 | ||
| Debt/EBITDA | 3.67 | ||
| Cap/Depr | 23.11% | ||
| Cap/Sales | 2.9% | ||
| Interest Coverage | 2.44 | ||
| Cash Conversion | 48.51% | ||
| Profit Quality | 103.37% | ||
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | 1.29 |
F-Score8
WACC8.98%
ROIC/WACC0.68
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)1.8%
EPS 3Y7.15%
EPS 5Y8.6%
EPS Q2Q%-10.48%
EPS Next Y-9.86%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
EPS Next 5YN/A
Revenue 1Y (TTM)-4.97%
Revenue growth 3Y19.44%
Revenue growth 5Y15%
Sales Q2Q%-13.05%
Revenue Next Year-10.47%
Revenue Next 2Y-4.37%
Revenue Next 3Y-2.34%
Revenue Next 5YN/A
EBIT growth 1Y21.69%
EBIT growth 3Y11.24%
EBIT growth 5Y11.15%
EBIT Next Year-5.63%
EBIT Next 3Y1.57%
EBIT Next 5YN/A
FCF growth 1Y-12.25%
FCF growth 3Y-0.17%
FCF growth 5Y-0.1%
OCF growth 1Y-6.93%
OCF growth 3Y3.37%
OCF growth 5Y2%