28.98 USD
+0.03 (+0.1%)
We assign a fundamental rating of 5 out of 10 to OTEX. OTEX was compared to 277 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! 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.
- 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
- The Return On Assets of OTEX (3.70%) is better than 68.95% of its industry peers.
- OTEX has a better Return On Equity (12.61%) than 76.17% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 7.53%, OTEX is in the better half of the industry, outperforming 77.26% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for OTEX is below the industry average of 10.78%.
- 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 70.40% of its industry peers.
- In the last couple of years the Profit Margin of OTEX has grown nicely.
- OTEX's Operating Margin of 20.73% is amongst the best of the industry. OTEX outperforms 86.28% of its industry peers.
- In the last couple of years the Operating Margin of OTEX has remained more or less at the same level.
- With a Gross Margin value of 72.51%, OTEX perfoms like the industry average, outperforming 57.76% of the companies in the same industry.
- OTEX's Gross Margin has been stable in the last couple of years.
| 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
- With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), OTEX is destroying value.
- The number of shares outstanding for OTEX has been reduced compared to 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 1.28, 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 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.
- Looking at the Debt to FCF ratio, with a value of 7.04, OTEX is in line with its industry, outperforming 52.35% of the companies in the same industry.
- A Debt/Equity ratio of 1.60 is on the high side and indicates that OTEX has dependencies on debt financing.
- OTEX has a worse Debt to Equity ratio (1.60) than 80.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.6 | ||
| Debt/FCF | 7.04 | ||
| Altman-Z | 1.28 |
ROIC/WACC0.76
WACC9.91%
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 81.95% of its industry peers.
- A Quick Ratio of 0.87 indicates that OTEX may have some problems paying its short term obligations.
- The Quick ratio of OTEX (0.87) is worse than 81.59% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
- The earnings per share for OTEX have decreased by -3.42% in the last year.
- OTEX shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.79% yearly.
- The Revenue has decreased by -7.58% in the past year.
- OTEX shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.69% yearly.
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
- The Earnings Per Share is expected to grow by 8.33% on average over the next years. This is quite good.
- The Revenue is expected to grow by 4.54% on average over the next years.
EPS Next Y10.02%
EPS Next 2Y9.09%
EPS Next 3Y8.33%
EPS Next 5YN/A
Revenue Next Year1.28%
Revenue Next 2Y1.54%
Revenue Next 3Y1.48%
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 7.34, the valuation of OTEX can be described as very cheap.
- OTEX's Price/Earnings ratio is rather cheap when compared to the industry. OTEX is cheaper than 91.70% of the companies in the same industry.
- OTEX is valuated cheaply when we compare the Price/Earnings ratio to 27.30, which is the current average of the S&P500 Index.
- A Price/Forward Earnings ratio of 6.36 indicates a rather cheap valuation of OTEX.
- OTEX's Price/Forward Earnings ratio is rather cheap when compared to the industry. OTEX is cheaper than 93.14% of the companies in the same industry.
- When comparing the Price/Forward Earnings ratio of OTEX to the average of the S&P500 Index (24.32), we can say OTEX is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.34 | ||
| Fwd PE | 6.36 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, OTEX is valued cheaply inside the industry as 92.06% of the companies are valued more expensively.
- 94.95% of the companies in the same industry are more expensive than OTEX, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.06 | ||
| EV/EBITDA | 7.34 |
4.3 Compensation for Growth
- OTEX's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- OTEX has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)0.73
PEG (5Y)1.27
EPS Next 2Y9.09%
EPS Next 3Y8.33%
5. Dividend
5.1 Amount
- OTEX has a Yearly Dividend Yield of 3.15%. Purely for dividend investing, there may be better candidates out there.
- In the last 3 months the price of OTEX has falen by -26.43%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
- Compared to an average industry Dividend Yield of 0.52, OTEX pays a better dividend. On top of this OTEX pays more dividend than 96.39% of the companies listed in the same industry.
- OTEX's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
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 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
- 54.34% of the earnings are spent on dividend by OTEX. 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 2Y9.09%
EPS Next 3Y8.33%
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.
What is the valuation status of OPEN TEXT CORP (OTEX) stock?
ChartMill assigns a valuation rating of 9 / 10 to OPEN TEXT CORP (OTEX). This can be considered as Undervalued.
Can you provide the profitability details for OPEN TEXT CORP?
OPEN TEXT CORP (OTEX) has a profitability rating of 7 / 10.
What are the PE and PB ratios of OPEN TEXT CORP (OTEX) stock?
The Price/Earnings (PE) ratio for OPEN TEXT CORP (OTEX) is 7.34 and the Price/Book (PB) ratio is 1.85.
Is the dividend of OPEN TEXT CORP sustainable?
The dividend rating of OPEN TEXT CORP (OTEX) is 7 / 10 and the dividend payout ratio is 54.34%.