Open Text Corp

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OTEX : NASDAQ : Technology
$32.55 | %
Today's Range: 32.49 - 32.7
Avg. Daily Volume: 546600.0
05/26/17 - 4:00 PM ET

Financial Analysis


OPEN TEXT CORP's gross profit margin for the third quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. OPEN TEXT CORP has weak liquidity. Currently, the Quick Ratio is 0.74 which shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 83.41% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q3 FY17 Q3 FY16
Net Sales ($mil)593.13440.54
EBITDA ($mil)182.51146.25
EBIT ($mil)85.8586.9
Net Income ($mil)21.6269.12


Balance Sheet Q3 FY17 Q3 FY16
Cash & Equiv. ($mil)451.7890.41
Total Assets ($mil)7433.224423.37
Total Debt ($mil)2621.571582.0
Equity ($mil)3502.921909.89


Profitability Q3 FY17 Q3 FY16
Gross Profit Margin71.1471.9
EBITDA Margin30.7733.19
Operating Margin14.4719.73
Sales Turnover0.280.41
Return on Assets14.336.03
Return on Equity30.4213.97
Debt Q3 FY17 Q3 FY16
Current Ratio0.812.06
Debt/Capital0.430.45
Interest Expense31.7316.23
Interest Coverage2.715.35


Share Data Q3 FY17 Q3 FY16
Shares outstanding (mil)262.75241.17
Div / share0.120.1
EPS0.080.29
Book value / share13.337.92
Institutional Own % n/a n/a
Avg Daily Volume552519.0404631.0

Valuation


BUY. OPEN TEXT CORP's P/E ratio indicates a significant discount compared to an average of 72.32 for the Software industry and a significant discount compared to the S&P 500 average of 25.02. To use another comparison, its price-to-book ratio of 2.38 indicates a discount versus the S&P 500 average of 3.00 and a significant discount versus the industry average of 9.02. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, OPEN TEXT CORP proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
OTEX 7.31 Peers 72.32   OTEX 17.93 Peers 26.82

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

OTEX is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

OTEX is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
OTEX 12.97 Peers 42.49   OTEX NM Peers 0.79

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

OTEX is trading at a significant discount to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

OTEX's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
OTEX 2.38 Peers 9.02   OTEX 296.80 Peers 87.54

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

OTEX is trading at a significant discount to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

OTEX is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
OTEX 3.95 Peers 6.51   OTEX 15.80 Peers 8.41

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

OTEX is trading at a significant discount to its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

OTEX has a sales growth rate that significantly exceeds its peers.

 

 

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