NEW YORK (TheStreet) -- Open Text
(OTEX) shares are rising, up 8% to $49.76 on Friday, following the release of the company's third quarter earnings report.
The company's board declared a 15% raise in its quarterly cash dividend to 17.25 cents from 15 cents per common share to be paid on June 13, 2014.
However, the Canadian software company also posted earnings and revenue results below Wall Street expectations in the quarter.
The company reported year over year quarterly revenue was up 31% to $442.8 million, missing analysts estimates of $481.85 million, while non-GAAP income of 84 cents per share missed analysts estimates by 7 cents.
Must Read: Warren Buffett's 10 Favorite Growth Stocks
TheStreet Ratings team rates OPEN TEXT CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:"We rate OPEN TEXT CORP (OTEX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, OTEX's share price has jumped by 65.90%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, OTEX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.6%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for OPEN TEXT CORP is currently very high, coming in at 73.89%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, OTEX's net profit margin of 14.71% significantly trails the industry average.
- Despite currently having a low debt-to-equity ratio of 0.39, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.41 is sturdy.
- OPEN TEXT CORP's earnings per share declined by 13.5% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, OPEN TEXT CORP increased its bottom line by earning $1.26 versus $1.07 in the prior year.
- You can view the full analysis from the report here: OTEX Ratings Report
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.