OPEN TEXT CORP (OTEX) Stock Fundamental Analysis
NASDAQ:OTEX - Nasdaq - CA6837151068 - Common Stock - Currency: USD
Overall OTEX gets a fundamental rating of 5 out of 10. We evaluated OTEX against 285 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 has a bad growth rate and is valued cheaply. OTEX also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year OTEX was profitable.
In the past year OTEX had a positive cash flow from operations.
In the past 5 years OTEX has always been profitable.
In the past 5 years OTEX always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 4.81%, OTEX is in the better half of the industry, outperforming 74.39% of the companies in the same industry.
The Return On Equity of OTEX (15.62%) is better than 83.16% of its industry peers.
OTEX has a Return On Invested Capital of 6.12%. This is in the better half of the industry: OTEX outperforms 77.89% 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 11.46%.
The 3 year average ROIC (4.80%) for OTEX is below the current ROIC(6.12%), indicating increased profibility in the last year.
| 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
The Profit Margin of OTEX (12.21%) is better than 76.14% of its industry peers.
In the last couple of years the Profit Margin of OTEX has declined.
With an excellent Operating Margin value of 19.44%, OTEX belongs to the best of the industry, outperforming 86.32% 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 72.64%, OTEX is doing good in the industry, outperforming 62.11% 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.
OTEX has less shares outstanding than it did 1 year ago.
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
Based on the Altman-Z score of 1.27, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
With a Altman-Z score value of 1.27, OTEX perfoms like the industry average, outperforming 43.16% of the companies in the same industry.
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.
OTEX's Debt to FCF ratio of 9.35 is in line compared to the rest of the industry. OTEX outperforms 50.18% of its industry peers.
A Debt/Equity ratio of 1.50 is on the high side and indicates that OTEX has dependencies on debt financing.
OTEX's Debt to Equity ratio of 1.50 is on the low side compared to the rest of the industry. OTEX is outperformed by 77.54% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.5 | ||
| Debt/FCF | 9.35 | ||
| Altman-Z | 1.27 |
ROIC/WACC0.66
WACC9.31%
2.3 Liquidity
OTEX has a Current Ratio of 0.87. 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's Current ratio of 0.87 is on the low side compared to the rest of the industry. OTEX is outperformed by 79.65% of its industry peers.
A Quick Ratio of 0.87 indicates that OTEX may have some problems paying its short term obligations.
OTEX has a Quick ratio of 0.87. This is in the lower half of the industry: OTEX underperforms 78.95% 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.
The Revenue has decreased by -4.97% in the past year.
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.
Based on estimates for the next years, OTEX will show a decrease in Revenue. The Revenue will decrease by -2.45% 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-10.45%
Revenue Next 2Y-4.4%
Revenue Next 3Y-2.45%
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
The Price/Earnings ratio is 6.79, which indicates a rather cheap valuation of OTEX.
94.39% of the companies in the same industry are more expensive than OTEX, based on the Price/Earnings ratio.
OTEX is valuated cheaply when we compare the Price/Earnings ratio to 28.64, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 6.46, the valuation of OTEX can be described as very cheap.
OTEX's Price/Forward Earnings ratio is rather cheap when compared to the industry. OTEX is cheaper than 96.49% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of OTEX to the average of the S&P500 Index (21.44), we can say OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 6.79 | ||
| Fwd PE | 6.46 |
4.2 Price Multiples
OTEX's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. OTEX is cheaper than 94.39% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, OTEX is valued cheaper than 94.04% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.39 | ||
| EV/EBITDA | 6.99 |
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)0.79
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.83%, OTEX has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 15.07, OTEX pays a better dividend. On top of this OTEX pays more dividend than 97.54% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.52, OTEX pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.83% |
5.2 History
On average, the dividend of OTEX grows each year by 9.59%, which is quite nice.
OTEX has been paying a dividend for at least 10 years, so it has 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.
OTEX's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP41.07%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
26.87
+0.98 (+3.79%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners77.19%
Inst Owner Change0.05%
Ins Owners2.04%
Ins Owner ChangeN/A
Market Cap7.09B
Analysts78
Price Target41.21 (53.37%)
Short Float %2.86%
Short Ratio6.75
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.83% |
Yearly Dividend0.99
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)0.63%
PT rev (3m)-0.16%
EPS NQ rev (1m)-1.11%
EPS NQ rev (3m)-13.95%
EPS NY rev (1m)0.06%
EPS NY rev (3m)1.1%
Revenue NQ rev (1m)-0.08%
Revenue NQ rev (3m)-3.68%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.85%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 6.79 | ||
| Fwd PE | 6.46 | ||
| P/S | 1.31 | ||
| P/FCF | 10.39 | ||
| P/OCF | 8.44 | ||
| P/B | 1.68 | ||
| P/tB | N/A | ||
| EV/EBITDA | 6.99 |
EPS(TTM)3.96
EY14.74%
EPS(NY)4.16
Fwd EY15.48%
FCF(TTM)2.59
FCFY9.63%
OCF(TTM)3.18
OCFY11.84%
SpS20.5
BVpS16.02
TBVpS-20.77
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 | 1.27 |
F-Score8
WACC9.31%
ROIC/WACC0.66
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-10.45%
Revenue Next 2Y-4.4%
Revenue Next 3Y-2.45%
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%