26.38 USD
-1 (-3.65%)
26.38 USD
0 (0%)
Taking everything into account, OTEX scores 5 out of 10 in our fundamental rating. OTEX was compared to 278 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 Finally OTEX also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- OTEX had positive earnings in the past year.
- OTEX had a positive operating cash flow in the past year.
- Each year in the past 5 years OTEX has 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 68.70% of its industry peers.
- OTEX has a better Return On Equity (12.61%) than 75.90% of its industry peers.
- OTEX's Return On Invested Capital of 7.53% is fine compared to the rest of the industry. OTEX outperforms 77.34% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital for OTEX is below the industry average of 10.76%.
- 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
- The Profit Margin of OTEX (9.60%) is better than 69.78% of its industry peers.
- In the last couple of years the Profit Margin of OTEX has grown nicely.
- With an excellent Operating Margin value of 20.73%, OTEX belongs to the best of the industry, outperforming 86.33% of the companies in the same industry.
- OTEX's Operating Margin has been stable in the last couple of years.
- OTEX's Gross Margin of 72.51% is in line compared to the rest of the industry. OTEX outperforms 57.91% of 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 | 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.
- 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.
- Compared to 1 year ago, OTEX has a worse debt to assets ratio.
2.2 Solvency
- OTEX has an Altman-Z score of 1.26. This is a bad value and indicates that OTEX is not financially healthy and even has some risk of bankruptcy.
- The Altman-Z score of OTEX (1.26) is comparable to the rest of the industry.
- OTEX has a debt to FCF ratio of 7.04. This is a slightly negative value and a sign of low solvency as OTEX would need 7.04 years to pay back of all of its debts.
- The Debt to FCF ratio of OTEX (7.04) is comparable to the rest of the industry.
- OTEX has a Debt/Equity ratio of 1.60. This is a high value indicating a heavy dependency on external financing.
- OTEX's Debt to Equity ratio of 1.60 is on the low side compared to the rest of the industry. OTEX is outperformed by 80.94% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.6 | ||
| Debt/FCF | 7.04 | ||
| Altman-Z | 1.26 |
ROIC/WACC0.77
WACC9.73%
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 has a Current ratio of 0.87. This is amonst the worse of the industry: OTEX underperforms 81.65% of its industry peers.
- OTEX has a Quick 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 Quick ratio of OTEX (0.87) is worse than 80.94% 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%.
- 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.
- The Revenue has decreased by -7.58% in the past year.
- The Revenue has been growing by 10.69% on average over the past years. This is quite good.
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
- Based on estimates for the next years, OTEX will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.33% on average per year.
- The Revenue is expected to grow by 4.54% on average over the next years.
EPS Next Y9.99%
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
- The EPS growth rate is accelerating: in the next years the growth will be better 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
- The Price/Earnings ratio is 6.68, which indicates a rather cheap valuation of OTEX.
- Based on the Price/Earnings ratio, OTEX is valued cheaply inside the industry as 91.73% of the companies are valued more expensively.
- OTEX is valuated cheaply when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
- Based on the Price/Forward Earnings ratio of 5.79, 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 93.17% of the companies in the same industry.
- OTEX's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 6.68 | ||
| Fwd PE | 5.79 |
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 92.45% of the companies listed in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of OTEX indicates a rather cheap valuation: OTEX is cheaper than 94.96% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.34 | ||
| EV/EBITDA | 7.11 |
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.
- The decent profitability rating of OTEX may justify a higher PE ratio.
PEG (NY)0.67
PEG (5Y)1.15
EPS Next 2Y9.09%
EPS Next 3Y8.33%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.39%, OTEX has a reasonable but not impressive dividend return.
- In the last 3 months the price of OTEX has falen by -31.21%. 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 0.54, OTEX pays a better dividend. On top of this OTEX pays more dividend than 96.40% 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 | 3.39% |
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.
- OTEX's earnings are growing slower than its dividend. 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 6.68 and the Price/Book (PB) ratio is 1.68.
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%.