OPEN TEXT CORP (OTEX) Stock Fundamental Analysis
USA - NASDAQ:OTEX - CA6837151068 - Common Stock
33.68 USD
-0.6 (-1.75%)
33.63 USD
-0.05 (-0.15%)
We assign a fundamental rating of 5 out of 10 to OTEX. OTEX was compared to 281 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 may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
In the past year OTEX was profitable.
OTEX had a positive operating cash flow in the past year.
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
The Return On Assets of OTEX (3.70%) is better than 70.46% of its industry peers.
With a decent Return On Equity value of 12.61%, OTEX is doing good in the industry, outperforming 79.36% of the companies in the same industry.
OTEX has a better Return On Invested Capital (7.53%) than 77.58% 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 11.92%.
The 3 year average ROIC (6.00%) for OTEX is below the current ROIC(7.53%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.7% | ||
| ROE | 12.61% | ||
| ROIC | 7.53% |
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 has a Profit Margin of 9.60%. This is in the better half of the industry: OTEX outperforms 72.60% of its industry peers.
In the last couple of years the Profit Margin of OTEX has grown nicely.
OTEX has a Operating Margin of 20.73%. This is amongst the best in the industry. OTEX outperforms 85.77% of its industry peers.
In the last couple of years the Operating Margin of OTEX has remained more or less at the same level.
Looking at the Gross Margin, with a value of 72.51%, OTEX is in line with its industry, outperforming 59.07% 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 | 20.73% | ||
| PM (TTM) | 9.6% | ||
| GM | 72.51% |
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
OTEX has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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 is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.37, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
OTEX has a Altman-Z score (1.37) which is comparable to the rest of the industry.
The Debt to FCF ratio of OTEX is 7.04, which is on the high side as it means it would take OTEX, 7.04 years of fcf income to pay off all of its debts.
OTEX has a Debt to FCF ratio of 7.04. This is comparable to the rest of the industry: OTEX outperforms 53.38% of its industry peers.
OTEX has a Debt/Equity ratio of 1.60. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 1.60, OTEX is not doing good in the industry: 78.29% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.6 | ||
| Debt/FCF | 7.04 | ||
| Altman-Z | 1.37 |
ROIC/WACC0.77
WACC9.83%
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.
The Current ratio of OTEX (0.87) is worse than 79.00% of its industry peers.
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 78.65% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
OTEX shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -3.42%.
OTEX shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.79% yearly.
Looking at the last year, OTEX shows a decrease in Revenue. The Revenue has decreased by -7.58% in the last year.
Measured over the past years, OTEX shows a quite strong growth in Revenue. The Revenue has been growing by 10.69% on average per year.
EPS 1Y (TTM)-3.42%
EPS 3Y5.95%
EPS 5Y5.79%
EPS Q2Q%12.9%
Revenue 1Y (TTM)-7.58%
Revenue growth 3Y13.94%
Revenue growth 5Y10.69%
Sales Q2Q%1.51%
3.2 Future
OTEX is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.42% yearly.
OTEX is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.54% yearly.
EPS Next Y9.76%
EPS Next 2Y9.3%
EPS Next 3Y7.42%
EPS Next 5YN/A
Revenue Next Year1.62%
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 8.53, the valuation of OTEX can be described as very reasonable.
Based on the Price/Earnings ratio, OTEX is valued cheaply inside the industry as 89.68% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 25.89, OTEX is valued rather cheaply.
A Price/Forward Earnings ratio of 7.36 indicates a rather cheap valuation of OTEX.
Based on the Price/Forward Earnings ratio, OTEX is valued cheaper than 91.81% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 34.59, OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.53 | ||
| Fwd PE | 7.36 |
4.2 Price Multiples
OTEX's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. OTEX is cheaper than 92.17% of the companies in the same industry.
OTEX's Price/Free Cash Flow ratio is rather cheap when compared to the industry. OTEX is cheaper than 93.24% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.46 | ||
| EV/EBITDA | 8.17 |
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)0.87
PEG (5Y)1.47
EPS Next 2Y9.3%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
OTEX has a Yearly Dividend Yield of 2.81%.
Compared to an average industry Dividend Yield of 41.08, OTEX pays a better dividend. On top of this OTEX pays more dividend than 95.73% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, OTEX has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.81% |
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
OTEX pays out 54.34% of its income as dividend. 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.
DP54.34%
EPS Next 2Y9.3%
EPS Next 3Y7.42%
33.68
-0.6 (-1.75%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.71%
Inst Owner Change0.72%
Ins Owners2.08%
Ins Owner ChangeN/A
Market Cap8.57B
Revenue(TTM)5.19B
Net Income(TTM)498.12M
Analysts78
Price Target44.79 (32.99%)
Short Float %3.97%
Short Ratio7.23
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.81% |
Yearly Dividend1.04
Dividend Growth(5Y)8.34%
DP54.34%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)9.93%
Min EPS beat(2)4.13%
Max EPS beat(2)15.74%
EPS beat(4)4
Avg EPS beat(4)11.61%
Min EPS beat(4)4.13%
Max EPS beat(4)17.92%
EPS beat(8)6
Avg EPS beat(8)6.82%
EPS beat(12)10
Avg EPS beat(12)10.63%
EPS beat(16)12
Avg EPS beat(16)8.08%
Revenue beat(2)0
Avg Revenue beat(2)-0.66%
Min Revenue beat(2)-0.91%
Max Revenue beat(2)-0.42%
Revenue beat(4)0
Avg Revenue beat(4)-1.5%
Min Revenue beat(4)-4.03%
Max Revenue beat(4)-0.42%
Revenue beat(8)1
Avg Revenue beat(8)-1.88%
Revenue beat(12)3
Avg Revenue beat(12)-1.07%
Revenue beat(16)3
Avg Revenue beat(16)-1.18%
PT rev (1m)-0.03%
PT rev (3m)8.42%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)9.84%
EPS NY rev (1m)-0.21%
EPS NY rev (3m)1.1%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.96%
Revenue NY rev (1m)-0.04%
Revenue NY rev (3m)0.74%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.53 | ||
| Fwd PE | 7.36 | ||
| P/S | 1.65 | ||
| P/FCF | 9.46 | ||
| P/OCF | 8.11 | ||
| P/B | 2.17 | ||
| P/tB | N/A | ||
| EV/EBITDA | 8.17 |
EPS(TTM)3.95
EY11.73%
EPS(NY)4.58
Fwd EY13.58%
FCF(TTM)3.56
FCFY10.57%
OCF(TTM)4.15
OCFY12.33%
SpS20.4
BVpS15.54
TBVpS-21.01
PEG (NY)0.87
PEG (5Y)1.47
Graham Number37.16
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.7% | ||
| ROE | 12.61% | ||
| ROCE | 9.76% | ||
| ROIC | 7.53% | ||
| ROICexc | 8.36% | ||
| ROICexgc | 131.42% | ||
| OM | 20.73% | ||
| PM (TTM) | 9.6% | ||
| GM | 72.51% | ||
| FCFM | 17.46% |
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-Score6
Asset Turnover0.38
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.6 | ||
| Debt/FCF | 7.04 | ||
| Debt/EBITDA | 3.7 | ||
| Cap/Depr | 23.51% | ||
| Cap/Sales | 2.9% | ||
| Interest Coverage | 3.06 | ||
| Cash Conversion | 61.57% | ||
| Profit Quality | 181.84% | ||
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | 1.37 |
F-Score6
WACC9.83%
ROIC/WACC0.77
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)-3.42%
EPS 3Y5.95%
EPS 5Y5.79%
EPS Q2Q%12.9%
EPS Next Y9.76%
EPS Next 2Y9.3%
EPS Next 3Y7.42%
EPS Next 5YN/A
Revenue 1Y (TTM)-7.58%
Revenue growth 3Y13.94%
Revenue growth 5Y10.69%
Sales Q2Q%1.51%
Revenue Next Year1.62%
Revenue Next 2Y1.69%
Revenue Next 3Y1.56%
Revenue Next 5Y4.54%
EBIT growth 1Y2.5%
EBIT growth 3Y14.51%
EBIT growth 5Y11.45%
EBIT Next Year14.64%
EBIT Next 3Y7.63%
EBIT Next 5YN/A
FCF growth 1Y59.09%
FCF growth 3Y-8.21%
FCF growth 5Y-4.86%
OCF growth 1Y52.11%
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 9.76% 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 54.34%.