Open Text Corporation
Open Text Corporation Fundamental Analysis
Open Text Corporation (OTEX) shows moderate financial fundamentals with a PE ratio of 14.25, profit margin of 8.40%, and ROE of 10.88%. The company generates $5.2B in annual revenue with weak year-over-year growth of -7.31%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 23.4/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze OTEX's fundamental strength across five key dimensions:
Efficiency Score
WeakOTEX struggles to generate sufficient returns from assets.
Valuation Score
ExcellentOTEX trades at attractive valuation levels.
Growth Score
WeakOTEX faces weak or negative growth trends.
Financial Health Score
WeakOTEX carries high financial risk with limited liquidity.
Profitability Score
WeakOTEX struggles to sustain strong margins.
Key Financial Metrics
Is OTEX Expensive or Cheap?
P/E Ratio
OTEX trades at 14.25 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, OTEX's PEG of -1.35 indicates potential undervaluation.
Price to Book
The market values Open Text Corporation at 1.54 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 0.56 times EBITDA. This is generally considered low.
How Well Does OTEX Make Money?
Net Profit Margin
For every $100 in sales, Open Text Corporation keeps $8.40 as profit after all expenses.
Operating Margin
Core operations generate 20.03 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.88 in profit for every $100 of shareholder equity.
ROA
Open Text Corporation generates $3.22 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Open Text Corporation produces operating cash flow of $1.01B, showing steady but balanced cash generation.
Free Cash Flow
Open Text Corporation generates strong free cash flow of $865.95M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $3.46 in free cash annually.
FCF Yield
OTEX converts 14.05% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
14.25
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-1.35
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.54
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.19
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.63
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.94
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.11
vs 25 benchmark
ROA
Return on assets percentage
0.03
vs 25 benchmark
ROCE
Return on capital employed
0.09
vs 25 benchmark
How OTEX Stacks Against Its Sector Peers
| Metric | OTEX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 14.25 | 35.19 | Better (Cheaper) |
| ROE | 10.88% | 1155.00% | Weak |
| Net Margin | 8.40% | -127067.00% (disorted) | Weak |
| Debt/Equity | 1.63 | 0.41 | Weak (High Leverage) |
| Current Ratio | 0.94 | 4.71 | Weak Liquidity |
| ROA | 3.22% | -314918.00% (disorted) | Weak |
OTEX outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Open Text Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
77.72%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
98.99%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
-10.48%
Industry Style: Growth, Innovation, High Beta
Declining