OTEX  Open Text Corporation

Exchange

NASDAQ

Sector

Technology

Industry

EDP Services

Market Cap.

8.55B

Vuru Grade

87.35/100

Current Price

$32.55
+0.04 (+0.12%)

Growth Price

$60.23
Undervalued by 85.03%

Stability Price

$20.36
Overvalued by 37.44%

Company Metrics

  • P/E 7.64
  • P/S 4.05
  • P/B 2.44
  • EPS 4.26
  • Cash ROIC 15.41%
  • Cash Ratio 1.93
  • Dividend 0.53 / 1.62 %
  • Avg. Vol. 544,033.00
  • Shares 122.04M
  • Market Cap. 8.55B

Company Description

Open Text Corporation develops, markets, sells, licenses, and supports enterprise content management (ECM) solutions primarily in North America and Europe. The company's ECM software and solutions enable customers to manage various types of enterprise content, including business documents, Web content, records, digital assets, email, forms and reports, forums, blogs, wikis, and real time instant m... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Open Text Corp.: Deep Value Hiding in Plain Sight?
The Motley Fool Canada - May 8, 2017
Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX) is a Canadian developer of enterprise information management (EIM) software. Open Text's software is used to manage content or unstructured data for commercial and government organizations.
Open Text Corporation (USA) (OTEX) Releases Earnings Results, Misses ... - Highland Mirror
Buffett Followers: Open Text Corp. Is a Dividend-Growth King in the Making
The Motley Fool Canada - Jan 24, 2017
Open Text Corp. (TSX:OTC)(NASDAQ:OTEX) is a rare technology gem with explosive earnings growth that many investors overlook.
Open Text Corp (USA) (NASDAQ:OTEX) Stock “Strong Buy” Reiterated After Split - BNL Finance (press release) (registration) (blog)
Open Text (USA) (OTEX) At $32.55 Forms Top, Armistice Capital Has Increased ...
NormanObserver.com - 4 hours ago
Open Text Corp (USA) (OTEX) formed multiple top with $35.15 target or 8.00% above today's $32.55 share price. Open Text Corp (USA) (OTEX) has $8.60 billion valuation. The stock increased 0.12% or $0.04 on May 26, reaching $32.55. About 383,675 ...
What's Open Text Corp (USA) (OTEX) Upside After Forming Multiple Top? - Weekly Register
Mitsubishi UFG Securities Initiates Open Text At Overweight
Benzinga - Oct 21, 2016
Mitsubishi UFG Securities has started coverage of Open Text Corp (USA) (NASDAQ: OTEX) with an Overweight rating and a price target of $74, implying an upside potential of 15 percent from current levels.
Open Text Corporation (NASDAQ:OTEX) will be paying shareholders dividends of ...
Finance News Daily - May 23, 2017
More notable recent Open Text Corp (USA) (NASDAQ:OTEX) news were published by: Schaeffersresearch.com which released: “2 Tech Stocks Flashing 'Buy'” on May 16, 2017, also Fool.
M&A News: Open Text Corp (USA) to Buy Dell Unit for $1.62B
Investorplace.com - Sep 12, 2016
Open Text Corp (USA) (NASDAQ:OTEX) has announced plans to purchase a unit from Dell for $1.62 billion. OpenText, Dell, OTEX The deal will have OpenText acquiring Dell EMC's Enterprise Content Division.
OpenText to buy Dell EMC's enterprise content division - PCWorld
Open Text to buy Dell EMC's ECD business for $1.6 billion - MarketWatch
As Open Text Corp (OTEX) Shares Declined, Holder New South Capital Management ...
Finance News Daily - May 22, 2017
More notable recent Open Text Corp (USA) (NASDAQ:OTEX) news were published by: Schaeffersresearch.com which released: “2 Tech Stocks Flashing 'Buy'” on May 16, 2017, also Fool.
Open Text (USA) (OTEX) At $32.34 Forms Top; Polarityte (COOL) Shorts Down By ... - HuronReport
As Open Text Corp (OTEX) Share Price Declined, Holder New South Capital ... - Press Telegraph
Why Open Text Corp (USA) (NASDAQ:OTEX) stock will be just fine
BNL Finance (press release) (registration) (blog) - May 12, 2017
OTEX stock is down about 6% since Open Text Corp (USA) (NASDAQ:OTEX) announced earnings. The company missed EPS expectations and revenue expectations.
Analyst provided some recent clues on Open Text Corporation (OTEX) and Diana ... - USA Commerce Daily
Zacks Investment Research downgraded Open Text Corp (USA) (NASDAQ:OTEX) to ... - Breaking Finance News
Open Text Corp (USA) (OTEX) Stock Outlook For 2017
BNL Finance (press release) (registration) (blog) - Dec 5, 2016
Open Text Corp (USA) (NASDAQ:OTEX) has very quietly become one of the best opportunities in technology with gains of 30% in 2016.
Conference Call Update: Open Text Corp (USA)(NASDAQ:OTEX)
Stocks In Focus (press release) - May 17, 2017
On Monday, Shares of Open Text Corp (USA)(NASDAQ:OTEX) gained 0.24% to $34.09. During the day, the lowest price at which share is traded was $33.70 and hit the highest price at $34.12.
2 Tech Stocks Flashing 'Buy' - Schaeffers Research (blog)
Traders Are Bullish Open Text Corp (USA) (OTEX) After The Stock Formed Bullish ... - WeeklyHub
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for OTEX to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate OTEX's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$32.55 Current Price

$60.23 Growth Price (DCF)

Undervalued by 85.03%


Growth Rate Assumed by Market: -10.19%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$20.36 Stability Price (EPV)

Overvalued by 37.44%


Discount Rate: 15.0%

$55.93 Book Price

Undervalued by 71.84%


Excellent Cash Return on Invested Capital over the past 5 years

OTEX has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

OTEX has created $15.41 of cash for every $100 invested.
Figures in USD. Fiscal year ends in June
20122013201420152016
Free Cash Flow 240.47M 295.20M 374.67M 445.99M 455.71M
divided by
Invested Capital 1.41B 1.66B 2.83B 3.05B 3.19B
Cash ROIC 17.08% 17.82% 13.24% 14.61% 14.30%

Satisfactory Return on Equity over the past 5 years

OTEX has generated adequate returns with capital that shareholders have invested. This is sufficient and implies that management performance has been good.

OTEX has generated $12.44 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in June
20122013201420152016
Net Income 125.17M 148.52M 218.07M 234.41M 284.50M
divided by
Stockholders' Equity 1.18B 1.34B 1.64B 1.83B 1.98B
Return on Equity 10.61% 11.11% 13.28% 12.81% 14.38%

Excellent Business Performance over the past 10 years

OTEX has been able to maintain profitability in good times and bad. This could mean OTEX has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

OTEX has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Free Cash Flow 105.60M 159.08M 164.02M 160.88M 186.56M 240.47M 295.20M 374.67M 445.99M 455.71M

Weak Balance Sheet

OTEX's financial position is not ideal. The key is to check whether OTEX is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Cash 149.98M 254.92M 275.82M 326.19M 284.14M 559.75M 470.45M 427.89M 711.17M 1.30B
Current Assets 350.44M 430.07M 434.91M 539.64M 515.16M 789.27M 717.09M 815.74M 1.10B 1.67B
Total Assets 1.33B 1.43B 1.51B 1.71B 1.93B 2.44B 2.65B 3.92B 4.39B 5.15B
Current Liabilities 282.66M 297.86M 318.73M 422.89M 415.37M 476.51M 527.88M 659.88M 625.43M 671.03M
Total Liabilities 802.78M 798.52M 820.77M 827.80M 892.92M 1.26B 1.32B 2.28B 2.56B 3.18B
Stockholder' Equity 524.07M 636.16M 686.46M 886.22M 1.04B 1.18B 1.34B 1.64B 1.83B 1.98B
Current Ratio 1.24 1.44 1.36 1.28 1.24 1.66 1.36 1.24 1.76 2.49
TL-to-TA 0.61 0.56 0.54 0.48 0.46 0.52 0.50 0.58 0.58 0.62

Consistent Reinvestment of Profits over the past 10 years

OTEX has consistently retained profits. This may put OTEX in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, OTEX can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Retained Earnings -5.47M 47.54M 104.48M 192.03M 316.89M 442.07M 572.89M 716.32M 863.02M 992.55M
Retained Earnings Growth - 969.92% 119.77% 83.80% 65.02% 39.50% 29.59% 25.04% 20.48% 15.01%

Growing Competitive Advantage over the past 10 years

OTEX has a growing competitive advantage. This could be due to strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will continue to strengthen.

$10.26 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Net Income 21.66M 53.01M 56.94M 87.55M 123.20M 125.17M 148.52M 218.07M 234.41M 284.50M
divided by
Revenue 595.66M 725.53M 785.67M 912.02M 1.03B 1.21B 1.36B 1.62B 1.85B 1.82B
Net Profit Margin 3.64% 7.31% 7.25% 9.60% 11.92% 10.37% 10.89% 13.42% 12.66% 15.60%

Strong Pricing Power over the past 10 years

OTEX has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$69.14 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Gross Profit 394.11M 492.80M 533.83M 615.49M 692.28M 1.04B 877.43M 1.11B 1.25B 1.25B
divided by
Revenue 595.66M 725.53M 785.67M 912.02M 1.03B 1.21B 1.36B 1.62B 1.85B 1.82B
Gross Margin 66.16% 67.92% 67.95% 67.49% 67.00% 86.00% 64.36% 68.51% 67.50% 68.53%

Low Capital Intensity over the past 10 years

OTEX has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that OTEX may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

22.39% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Capital Expenditure 5.26M 6.90M 12.15M 19.31M 36.66M 26.02M 23.30M 42.46M 77.05M 70.01M
divided by
Net Income 21.66M 53.01M 56.94M 87.55M 123.20M 125.17M 148.52M 218.07M 234.41M 284.50M
Capital Expenditure Ratio 24.28% 13.01% 21.34% 22.06% 29.76% 20.79% 15.69% 19.47% 32.87% 24.61%

No Dividend History over the past 10 years

OTEX has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 50.91M 52.60M 53.27M 57.39M 58.26M 58.73M 118.12M 120.58M 122.96M 122.04M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 31.58 30.60 40.67 46.76 51.14 55.33 92.65 58.91 48.68 61.81
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

OTEX has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Shares Outstanding 50.91M 52.60M 53.27M 57.39M 58.26M 58.73M 118.12M 120.58M 122.96M 122.04M
Stock Bought Back - -3.22% -1.25% -7.17% -1.50% -0.81% -50.28% -2.03% -1.94% 0.75%
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