OPEN TEXT CORP (OTEX) Stock Fundamental Analysis
USA - NASDAQ:OTEX - CA6837151068 - Common Stock
36.59 USD
-1.07 (-2.84%)
36.5719 USD
-0.02 (-0.05%)
We assign a fundamental rating of 5 out of 10 to OTEX. OTEX was compared to 280 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, 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.
OTEX had positive earnings in each of the past 5 years.
In the past 5 years OTEX always reported a positive cash flow from operatings.
1.2 Ratios
OTEX has a Return On Assets of 3.16%. This is in the better half of the industry: OTEX outperforms 67.86% of its industry peers.
OTEX's Return On Equity of 11.09% is fine compared to the rest of the industry. OTEX outperforms 78.21% of its industry peers.
With a decent Return On Invested Capital value of 7.26%, OTEX is doing good in the industry, outperforming 76.79% of the companies in the same industry.
OTEX had an Average Return On Invested Capital over the past 3 years of 6.00%. This is significantly below the industry average of 11.85%.
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
Looking at the Profit Margin, with a value of 8.43%, OTEX is in the better half of the industry, outperforming 71.43% of the companies in the same industry.
OTEX's Profit Margin has improved in the last couple of years.
OTEX's Operating Margin of 20.09% is amongst the best of the industry. OTEX outperforms 86.43% of its industry peers.
In the last couple of years the Operating Margin of OTEX has remained more or less at the same level.
OTEX has a Gross Margin of 72.25%. This is comparable to the rest of the industry: OTEX outperforms 58.21% 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 | 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.
OTEX has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, OTEX has less shares outstanding
The debt/assets ratio for OTEX is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.34, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
OTEX has a Altman-Z score of 1.34. This is in the lower half of the industry: OTEX underperforms 61.43% of its industry peers.
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 (9.28) which is comparable to the rest of the industry.
A Debt/Equity ratio of 1.61 is on the high side and indicates that OTEX has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.61, OTEX is doing worse than 79.29% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.61 | ||
| Debt/FCF | 9.28 | ||
| Altman-Z | 1.34 |
ROIC/WACC0.72
WACC10.1%
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 80.36% of its industry peers.
OTEX has a Quick 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.
OTEX has a Quick ratio of 0.80. This is amonst the worse of the industry: OTEX underperforms 80.36% 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.
OTEX shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -10.42%.
The Revenue has been growing by 10.69% on average over the past years. This is quite good.
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
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
A Price/Earnings ratio of 9.55 indicates a reasonable valuation of OTEX.
Based on the Price/Earnings ratio, OTEX is valued cheaper than 90.00% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.20, OTEX is valued rather cheaply.
The Price/Forward Earnings ratio is 8.67, which indicates a very decent valuation of OTEX.
Based on the Price/Forward Earnings ratio, OTEX is valued cheaper than 93.93% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.71, OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.55 | ||
| Fwd PE | 8.67 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, OTEX is valued cheaper than 92.14% of the companies 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 92.14% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.54 | ||
| EV/EBITDA | 8.65 |
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)0.94
PEG (5Y)1.65
EPS Next 2Y9.19%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
OTEX has a Yearly Dividend Yield of 2.78%.
Compared to an average industry Dividend Yield of 40.28, OTEX pays a better dividend. On top of this OTEX pays more dividend than 97.50% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, OTEX has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.78% |
5.2 History
The dividend of OTEX is nicely growing with an annual growth rate of 8.34%!
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)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.
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%
36.59
-1.07 (-2.84%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.68%
Inst Owner Change-1.58%
Ins Owners2.13%
Ins Owner ChangeN/A
Market Cap9.31B
Analysts76
Price Target40.61 (10.99%)
Short Float %4.43%
Short Ratio7.14
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.78% |
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)-2.29%
PT rev (3m)-0.79%
EPS NQ rev (1m)0%
EPS NQ rev (3m)5.73%
EPS NY rev (1m)1.51%
EPS NY rev (3m)1.51%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.47%
Revenue NY rev (1m)0.89%
Revenue NY rev (3m)0.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.55 | ||
| Fwd PE | 8.67 | ||
| P/S | 1.8 | ||
| P/FCF | 13.54 | ||
| P/OCF | 11.2 | ||
| P/B | 2.37 | ||
| P/tB | N/A | ||
| EV/EBITDA | 8.65 |
EPS(TTM)3.83
EY10.47%
EPS(NY)4.22
Fwd EY11.54%
FCF(TTM)2.7
FCFY7.39%
OCF(TTM)3.27
OCFY8.93%
SpS20.32
BVpS15.45
TBVpS-21.88
PEG (NY)0.94
PEG (5Y)1.65
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 | 1.34 |
F-Score4
WACC10.1%
ROIC/WACC0.72
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%