OPEN TEXT CORP (OTEX) Stock Fundamental Analysis
USA - NASDAQ:OTEX - CA6837151068 - Common Stock
34.57 USD
-1.41 (-3.92%)
34.57 USD
0 (0%)
We assign a fundamental rating of 5 out of 10 to OTEX. OTEX was compared to 284 industry peers in the Software industry. OTEX scores excellent on profitability, but there are 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
In the past year OTEX was profitable.
OTEX had a positive operating cash flow in the past year.
OTEX had positive earnings in each of the past 5 years.
OTEX had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a decent Return On Assets value of 3.16%, OTEX is doing good in the industry, outperforming 67.25% of the companies in the same industry.
With a decent Return On Equity value of 11.09%, OTEX is doing good in the industry, outperforming 78.52% of the companies in the same industry.
OTEX's Return On Invested Capital of 7.26% is fine compared to the rest of the industry. OTEX outperforms 76.41% 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 11.85%.
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
Looking at the Profit Margin, with a value of 8.43%, OTEX is in the better half of the industry, outperforming 70.07% of the companies in the same industry.
In the last couple of years the Profit Margin of OTEX has grown nicely.
Looking at the Operating Margin, with a value of 20.09%, OTEX belongs to the top of the industry, outperforming 85.92% of the companies in the same industry.
In the last couple of years the Operating Margin of OTEX has remained more or less at the same level.
The Gross Margin of OTEX (72.25%) is comparable to the rest of the 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
OTEX has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for OTEX has been reduced compared to 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 1.33, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.33, OTEX is in line with its industry, outperforming 40.14% of the companies in the same industry.
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 in line with 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 has a worse Debt to Equity ratio (1.61) than 78.52% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.61 | ||
| Debt/FCF | 9.28 | ||
| Altman-Z | 1.33 |
ROIC/WACC0.74
WACC9.88%
2.3 Liquidity
A Current Ratio of 0.80 indicates that OTEX may have some problems paying its short term obligations.
With a Current ratio value of 0.80, OTEX is not doing good in the industry: 79.93% of the companies in the same industry are doing better.
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 in the lower half of the industry: OTEX underperforms 79.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.8 | ||
| Quick Ratio | 0.8 |
3. Growth
3.1 Past
The earnings per share for OTEX have decreased by -3.42% in the last year.
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%.
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)-10.42%
Revenue growth 3Y13.94%
Revenue growth 5Y10.69%
Sales Q2Q%1.51%
3.2 Future
Based on estimates for the next years, OTEX will show a small growth in Earnings Per Share. The EPS will grow by 7.42% on average per year.
The Revenue is expected to grow by 4.54% on average over the next years.
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
A Price/Earnings ratio of 8.75 indicates a reasonable valuation of OTEX.
OTEX's Price/Earnings ratio is rather cheap when compared to the industry. OTEX is cheaper than 90.85% of the companies in the same industry.
OTEX's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.83.
OTEX is valuated cheaply with a Price/Forward Earnings ratio of 7.56.
Based on the Price/Forward Earnings ratio, OTEX is valued cheaper than 92.96% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 32.68. OTEX is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.75 | ||
| Fwd PE | 7.56 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, OTEX is valued cheaper than 91.90% 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 89.79% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 12.79 | ||
| EV/EBITDA | 8.56 |
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)0.9
PEG (5Y)1.51
EPS Next 2Y9.3%
EPS Next 3Y7.42%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.67%, 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 36.34. OTEX pays more dividend than 95.42% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, OTEX has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
5.2 History
On average, the dividend of OTEX grows each year by 8.34%, 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)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 2Y9.3%
EPS Next 3Y7.42%
34.57
-1.41 (-3.92%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.71%
Inst Owner Change0.14%
Ins Owners2.08%
Ins Owner ChangeN/A
Market Cap8.79B
Revenue(TTM)5.17B
Net Income(TTM)435.87M
Analysts78
Price Target45.06 (30.34%)
Short Float %3.97%
Short Ratio7.23
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
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)10.96%
PT rev (3m)10.03%
EPS NQ rev (1m)-0.27%
EPS NQ rev (3m)9.52%
EPS NY rev (1m)0%
EPS NY rev (3m)1.31%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.96%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.78%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.75 | ||
| Fwd PE | 7.56 | ||
| P/S | 1.7 | ||
| P/FCF | 12.79 | ||
| P/OCF | 10.58 | ||
| P/B | 2.24 | ||
| P/tB | N/A | ||
| EV/EBITDA | 8.56 |
EPS(TTM)3.95
EY11.43%
EPS(NY)4.58
Fwd EY13.24%
FCF(TTM)2.7
FCFY7.82%
OCF(TTM)3.27
OCFY9.45%
SpS20.32
BVpS15.45
TBVpS-21.88
PEG (NY)0.9
PEG (5Y)1.51
Graham Number37.05
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 | 1.33 |
F-Score4
WACC9.88%
ROIC/WACC0.74
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)-10.42%
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 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 9.76% 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 62.29%.