NEW YORK (TheStreet) -- Shares of Actuate Corp. (BIRT) are climbing higher by 87.14% to $6.55 on very heavy volume in mid-morning trading on Friday, after the company announced it's being acquired by OpenText Corp. (OTEX) for $6.60 per share, or approximately $330 million.
The transaction was unanimously approved by the board of directors of both companies, and the deal is expected to close in the first quarter of 2015.
Actuate is a provider of software and services to develop and deploy custom business intelligence and information applications. OpenText is a Canada-based company that provides software products and services to assist organizations in finding, utilizing, and sharing business information.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
"The addition of Actuate enables OpenText to enhance their products with embedded analytics as well as enter a growing market. Together Actuate and OpenText will seek to extend the benefits of embedded analytics to more geographies and industries," the companies said.
Shares of OpenText are higher by 1.69% to $59.26 this morning.
Separately, TheStreet Ratings team rates ACTUATE CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ACTUATE CORP (BIRT) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ACTUATE CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ACTUATE CORP reported lower earnings of $0.13 versus $0.19 in the prior year. For the next year, the market is expecting a contraction of 92.3% in earnings ($0.01 versus $0.13).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 263.8% when compared to the same quarter one year ago, falling from $1.24 million to -$2.02 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, ACTUATE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.52%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 300.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for ACTUATE CORP is currently very high, coming in at 86.43%. Regardless of BIRT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BIRT's net profit margin of -8.33% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: BIRT Ratings Report