OPEN TEXT CORP (OTEX) Stock Fundamental Analysis
NASDAQ:OTEX - Nasdaq - CA6837151068 - Common Stock - Currency: USD
Taking everything into account, OTEX scores 5 out of 10 in our fundamental rating. OTEX was compared to 282 industry peers in the Software industry. OTEX has a medium profitability rating, but doesn't score so well on its financial health evaluation. OTEX is valued quite cheap, but it does not seem to be growing. Finally OTEX also has an excellent dividend rating.
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.
In the past 5 years OTEX always reported a positive cash flow from operatings.
1.2 Ratios
OTEX's Return On Assets of 4.76% is fine compared to the rest of the industry. OTEX outperforms 75.18% of its industry peers.
Looking at the Return On Equity, with a value of 15.87%, OTEX belongs to the top of the industry, outperforming 82.98% of the companies in the same industry.
The Return On Invested Capital of OTEX (5.98%) is better than 77.31% of its industry peers.
The Average Return On Invested Capital over the past 3 years for OTEX is significantly below the industry average of 12.28%.
The 3 year average ROIC (4.80%) for OTEX is below the current ROIC(5.98%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.76% | ||
| ROE | 15.87% | ||
| ROIC | 5.98% |
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 (12.55%) is better than 78.37% of its industry peers.
In the last couple of years the Profit Margin of OTEX has declined.
OTEX has a better Operating Margin (19.51%) than 86.52% of its industry peers.
OTEX's Operating Margin has declined in the last couple of years.
OTEX has a Gross Margin (72.30%) which is in line with 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 | 19.51% | ||
| PM (TTM) | 12.55% | ||
| GM | 72.3% |
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
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
OTEX has a better debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.28, we must say that OTEX is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of OTEX (1.28) is worse than 61.70% of its industry peers.
OTEX has a debt to FCF ratio of 9.01. This is a negative value and a sign of low solvency as OTEX would need 9.01 years to pay back of all of its debts.
OTEX has a Debt to FCF ratio of 9.01. This is comparable to the rest of the industry: OTEX outperforms 51.42% of its industry peers.
A Debt/Equity ratio of 1.54 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 1.54, OTEX is doing worse than 78.37% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | 9.01 | ||
| Altman-Z | 1.28 |
ROIC/WACC0.64
WACC9.3%
2.3 Liquidity
A Current Ratio of 0.86 indicates that OTEX may have some problems paying its short term obligations.
OTEX has a Current ratio of 0.86. This is in the lower half of the industry: OTEX underperforms 79.08% of its industry peers.
A Quick Ratio of 0.86 indicates that OTEX may have some problems paying its short term obligations.
OTEX has a worse Quick ratio (0.86) than 78.37% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.86 |
3. Growth
3.1 Past
OTEX shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -6.34%.
The Earnings Per Share has been growing by 8.60% on average over the past years. This is quite good.
OTEX shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -11.50%.
The Revenue has been growing by 15.00% on average over the past years. This is quite good.
EPS 1Y (TTM)-6.34%
EPS 3Y7.15%
EPS 5Y8.6%
EPS Q2Q%-12.77%
Revenue 1Y (TTM)-11.5%
Revenue growth 3Y19.44%
Revenue growth 5Y15%
Sales Q2Q%-13.32%
3.2 Future
OTEX is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.44% yearly.
OTEX is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -3.44% yearly.
EPS Next Y-9.86%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
EPS Next 5YN/A
Revenue Next Year-11.58%
Revenue Next 2Y-5.56%
Revenue Next 3Y-3.44%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 7.30, the valuation of OTEX can be described as very cheap.
Based on the Price/Earnings ratio, OTEX is valued cheaper than 95.04% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.30, OTEX is valued rather cheaply.
With a Price/Forward Earnings ratio of 6.74, the valuation of OTEX can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 96.10% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of OTEX to the average of the S&P500 Index (21.76), we can say OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.3 | ||
| Fwd PE | 6.74 |
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 95.39% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, OTEX is valued cheaply inside the industry as 94.68% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.25 | ||
| EV/EBITDA | 7.56 |
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)0.85
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
5. Dividend
5.1 Amount
OTEX has a Yearly Dividend Yield of 3.33%.
OTEX's Dividend Yield is rather good when compared to the industry average which is at 33.28. OTEX pays more dividend than 98.23% of the companies in the same industry.
OTEX's Dividend Yield is a higher than the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.33% |
5.2 History
The dividend of OTEX is nicely growing with an annual growth rate of 9.59%!
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
OTEX pays out 41.51% of its income as dividend. 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.
DP41.51%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
28.02
-1.21 (-4.14%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners80.68%
Inst Owner Change0%
Ins Owners2.13%
Ins Owner ChangeN/A
Market Cap7.26B
Analysts76
Price Target40.97 (46.22%)
Short Float %3.39%
Short Ratio5.88
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.33% |
Yearly Dividend0.99
Dividend Growth(5Y)9.59%
DP41.51%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)13.28%
Min EPS beat(2)8.64%
Max EPS beat(2)17.92%
EPS beat(4)3
Avg EPS beat(4)8.63%
Min EPS beat(4)-5.46%
Max EPS beat(4)17.92%
EPS beat(8)6
Avg EPS beat(8)5.68%
EPS beat(12)9
Avg EPS beat(12)8.97%
EPS beat(16)12
Avg EPS beat(16)7.33%
Revenue beat(2)0
Avg Revenue beat(2)-2.33%
Min Revenue beat(2)-4.03%
Max Revenue beat(2)-0.63%
Revenue beat(4)0
Avg Revenue beat(4)-3.23%
Min Revenue beat(4)-5.21%
Max Revenue beat(4)-0.63%
Revenue beat(8)1
Avg Revenue beat(8)-1.99%
Revenue beat(12)3
Avg Revenue beat(12)-1.17%
Revenue beat(16)4
Avg Revenue beat(16)-0.89%
PT rev (1m)-4.6%
PT rev (3m)-0.57%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-5.91%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.18%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.39%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.3 | ||
| Fwd PE | 6.74 | ||
| P/S | 1.39 | ||
| P/FCF | 10.25 | ||
| P/OCF | 8.47 | ||
| P/B | 1.76 | ||
| P/tB | N/A | ||
| EV/EBITDA | 7.56 |
EPS(TTM)3.84
EY13.7%
EPS(NY)4.16
Fwd EY14.84%
FCF(TTM)2.73
FCFY9.76%
OCF(TTM)3.31
OCFY11.81%
SpS20.14
BVpS15.93
TBVpS-21.1
PEG (NY)N/A
PEG (5Y)0.85
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.76% | ||
| ROE | 15.87% | ||
| ROCE | 9.07% | ||
| ROIC | 5.98% | ||
| ROICexc | 6.74% | ||
| ROICexgc | 187.89% | ||
| OM | 19.51% | ||
| PM (TTM) | 12.55% | ||
| GM | 72.3% | ||
| FCFM | 13.58% |
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-Score7
Asset Turnover0.38
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | 9.01 | ||
| Debt/EBITDA | 3.79 | ||
| Cap/Depr | 22.64% | ||
| Cap/Sales | 2.85% | ||
| Interest Coverage | 2.69 | ||
| Cash Conversion | 51.16% | ||
| Profit Quality | 108.15% | ||
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.86 | ||
| Altman-Z | 1.28 |
F-Score7
WACC9.3%
ROIC/WACC0.64
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)-6.34%
EPS 3Y7.15%
EPS 5Y8.6%
EPS Q2Q%-12.77%
EPS Next Y-9.86%
EPS Next 2Y-0.14%
EPS Next 3Y3.44%
EPS Next 5YN/A
Revenue 1Y (TTM)-11.5%
Revenue growth 3Y19.44%
Revenue growth 5Y15%
Sales Q2Q%-13.32%
Revenue Next Year-11.58%
Revenue Next 2Y-5.56%
Revenue Next 3Y-3.44%
Revenue Next 5YN/A
EBIT growth 1Y4.68%
EBIT growth 3Y11.24%
EBIT growth 5Y11.15%
EBIT Next Year-6.41%
EBIT Next 3Y1.99%
EBIT Next 5YN/A
FCF growth 1Y-8.9%
FCF growth 3Y-0.17%
FCF growth 5Y-0.1%
OCF growth 1Y-6.35%
OCF growth 3Y3.37%
OCF growth 5Y2%