NasdaqGS:OTEX

Stock Analysis Report

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Executive Summary

Open Text Corporation provides a suite of software products and services.


Snowflake Analysis

Mediocre balance sheet with moderate growth potential.


Similar Companies

Share Price & News

How has Open Text's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: OTEX has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.0%

OTEX

-2.0%

US Software

1.9%

US Market


1 Year Return

19.5%

OTEX

42.6%

US Software

16.4%

US Market

Return vs Industry: OTEX underperformed the US Software industry which returned 40.8% over the past year.

Return vs Market: OTEX exceeded the US Market which returned 16.3% over the past year.


Shareholder returns

OTEXIndustryMarket
7 Day1.0%-2.0%1.9%
30 Day7.1%-1.4%4.5%
90 Day17.6%16.6%17.6%
1 Year21.5%19.5%43.7%42.6%18.9%16.4%
3 Year50.6%43.3%151.6%143.0%44.1%34.8%
5 Year116.8%99.8%242.0%221.7%75.3%56.3%

Price Volatility Vs. Market

How volatile is Open Text's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Open Text undervalued compared to its fair value and its price relative to the market?

52.97x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: OTEX ($45.81) is trading above our estimate of fair value ($43.95)

Significantly Below Fair Value: OTEX is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: OTEX is good value based on its PE Ratio (53x) compared to the US Software industry average (55.3x).

PE vs Market: OTEX is poor value based on its PE Ratio (53x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: OTEX is poor value based on its PEG Ratio (2x)


Price to Book Ratio

PB vs Industry: OTEX is good value based on its PB Ratio (3.1x) compared to the US Software industry average (7.5x).


Next Steps

Future Growth

How is Open Text forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

25.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: OTEX's forecast earnings growth (25.9% per year) is above the savings rate (2.2%).

Earnings vs Market: OTEX's earnings (25.9% per year) are forecast to grow faster than the US market (23.1% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: OTEX's revenue (2.4% per year) is forecast to grow slower than the US market (9.4% per year).

High Growth Revenue: OTEX's revenue (2.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if OTEX's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Open Text performed over the past 5 years?

-12.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: OTEX has a large one-off loss of $100.4M impacting its June 30 2020 financial results.

Growing Profit Margin: OTEX's current net profit margins (7.5%) are lower than last year (10%).


Past Earnings Growth Analysis

Earnings Trend: OTEX's earnings have declined by 12.6% per year over the past 5 years.

Accelerating Growth: OTEX's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: OTEX had negative earnings growth (-18.1%) over the past year, making it difficult to compare to the Software industry average (12.7%).


Return on Equity

High ROE: OTEX's Return on Equity (5.8%) is considered low.


Next Steps

Financial Health

How is Open Text's financial position?


Financial Position Analysis

Short Term Liabilities: OTEX's short term assets ($2.4B) exceed its short term liabilities ($1.9B).

Long Term Liabilities: OTEX's short term assets ($2.4B) do not cover its long term liabilities ($4.3B).


Debt to Equity History and Analysis

Debt Level: OTEX's debt to equity ratio (104.7%) is considered high.

Reducing Debt: OTEX's debt to equity ratio has increased from 85.2% to 104.7% over the past 5 years.

Debt Coverage: OTEX's debt is well covered by operating cash flow (22.8%).

Interest Coverage: OTEX's interest payments on its debt are well covered by EBIT (4.6x coverage).


Balance Sheet


Next Steps

Dividend

What is Open Text current dividend yield, its reliability and sustainability?

1.52%

Current Dividend Yield


Upcoming Dividend Payment


Dividend Yield vs Market

Notable Dividend: OTEX's dividend (1.52%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.62%).

High Dividend: OTEX's dividend (1.52%) is low compared to the top 25% of dividend payers in the US market (4.35%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, OTEX has been paying a dividend for less than 10 years.

Growing Dividend: OTEX's dividend payments have increased, but the company has only paid a dividend for 7 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (80.8%), OTEX's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: OTEX's dividends in 3 years are forecast to be well covered by earnings (30.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.8yrs

Average management tenure


CEO

Mark Barrenechea (55 yo)

8.58yrs

Tenure

US$8,099,674

Compensation

Mr. Mark J. Barrenechea has been the Chief Executive Officer and President of OpenText Public Sector Solutions, Inc. since January 2, 2012 and has been its Chief Technology Officer since January 4, 2016. M ...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD8.10M) is about average for companies of similar size in the US market ($USD11.30M).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Mark Barrenechea
Vice Chairman8.58yrsUS$8.10m0.33%
$ 40.7m
Madhu Ranganathan
Executive VP & CFO2.33yrsUS$2.12m0.00074%
$ 92.0k
Gordon Davies
Executive VP10.92yrsUS$2.51m0.020%
$ 2.5m
Simon Harrison
Executive Vice President of Worldwide Sales2.83yrsUS$1.99m0.0069%
$ 857.4k
Muhi Majzoub
Executive VP & Chief Product Officer8.17yrsUS$2.68m0.028%
$ 3.5m
Howard Rosen
Senior VP & Chief Accounting Officer0.33yrno datano data
David Jamieson
Senior VP & Chief Information Officer5.75yrsUS$1.62m0.0031%
$ 381.5k
Harry Blount
Senior VP & Global Head of Investor Relationsno datano datano data
Louis Blatt
Senior VP & Chief Marketing Officer0.33yrno data0.00014%
$ 17.4k
Brian Sweeney
Senior VP & Chief Human Resources Officer1.83yrsno datano data
Christopher McGourlay
Executive Vice President of Customer Operations8.5yrsno data0.0050%
$ 615.1k
Noriyuki Hayakawa
President of Japan Operations7.25yrsno datano data

5.8yrs

Average Tenure

55.5yo

Average Age

Experienced Management: OTEX's management team is seasoned and experienced (5.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Mark Barrenechea
Vice Chairman8.58yrsUS$8.10m0.33%
$ 40.7m
Katharine Stevenson
Independent Director11.67yrsUS$369.90k0.019%
$ 2.4m
Deborah Weinstein
Independent Director10.67yrsUS$382.80k0.0074%
$ 915.8k
Gail Hamilton
Independent Director13.67yrsUS$358.52kno data
Stephen Sadler
Non Independent Director22.92yrsUS$984.16k0.050%
$ 6.2m
Randy Fowlie
Independent Lead Directorno dataUS$393.81kno data
Michael Slaunwhite
Independent Director22.42yrsUS$389.91k0.17%
$ 21.4m
Carl Tinggren
Independent Director3.5yrsUS$329.92kno data
Paul Jenkins
Independent Chairman of the Board22.58yrsUS$559.78k0.74%
$ 92.3m
Harmit Singh
Independent Director1.92yrsUS$351.32kno data
David Fraser
Independent Director1.92yrsUS$329.00kno data

11.2yrs

Average Tenure

60yo

Average Age

Experienced Board: OTEX's board of directors are seasoned and experienced ( 11.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: OTEX insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Open Text Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Open Text Corporation
  • Ticker: OTEX
  • Exchange: NasdaqGS
  • Founded: 1991
  • Industry: Application Software
  • Sector: Software
  • Market Cap: US$12.426b
  • Shares outstanding: 271.25m
  • Website: https://www.opentext.com

Number of Employees


Location

  • Open Text Corporation
  • 275 Frank Tompa Drive
  • Waterloo
  • Ontario
  • N2L 0A1
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
OTEXNasdaqGS (Nasdaq Global Select)YesCommon SharesUSUSDJan 1996
OTEXTSX (The Toronto Stock Exchange)YesCommon SharesCACADJan 1996
OTXDB (Deutsche Boerse AG)YesCommon SharesDEEURJan 1996

Biography

Open Text Corporation provides a suite of software products and services. The company offers content services; business network that manages and connects data within the organization; Cyber Resilience, a s ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/08/10 00:22
End of Day Share Price2020/08/07 00:00
Earnings2020/06/30
Annual Earnings2020/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.