Related posts
Soft jobs report lifts U.S. markets, TSX flat11 Hot Canadian AI Stocks to Buy (2023)TSX, Amazon rallyThis summary was created by AI, based on 23 opinions in the last 12 months.
Open Text is a software company with a focus on enterprise content-management platforms, cloud computing, and AI. Despite a history of slow organic growth, recent acquisitions and focus on AI and cloud computing have shown promise. The company has experienced record revenue and earnings growth in recent quarters, with a strong recurring revenue base. While some experts see the stock as a good long-term investment, others caution on high debt levels and pricey valuation.
Buying shares in recent market selloff. Latest earnings report not strong. However, business is very good. Would recommend holding for long term investors. Recent M&A has a lot of potential. Expecting higher margins and cash flow.
Disaster the last 5 years, down about 40%. Should be doing better, given demands for software. Market did not like one expensive acquisition, hurt balance sheet, still not recovered. No interest.
CSU is the one for him.
It has its moments from time to time, but overall hasn't been great for awhile. Part of the issue is it's still quite levered. There are other compounding machines, but this one just doesn't get the job done. Sell, and buy something like DSG or CSU.
He's looked at it and it's done a fairly good job. Would much prefer ENGH or CSU. And CSU is the clear market leader of companies that rely on acquisitions to drive growth.
OTEX has been trading sideways over the past couple of years, and its recent earnings results sent the stock lower. It remains highly profitable with good free cash flow, and trades at a cheap valuation for a tech stock (8.3X forward earnings). Its low valuation makes it a HOLD, but we would not add and do not like the negative momentum here.
Unlock Premium - Try 5i Free
Growth rates have really come down. It's taking longer to convert customers to cloud and AI. Good, long-term name that will be there. Better areas in AI elsewhere. Good at lower levels, but not here.
Owns shares in dividend fund. Will continue to hold. Downward guidance has prompted market selloff. Sales growing and appears business plan is strong. Recent management meetings presenting high quality of products. New A.I. technology very impressive. Current trading multiple very attractive for investors. Consistent dividend growth with steady income at ~3%.
They're trying to incorporate AI and haven't benefited from this AI boom. He's owned this for a while in his TFSA. Has been volatile, their free cash flow growth has been consistent and it's a quality name. Don't expect huge, sudden returns, but it's a good way to offer tech exposure.
OTEX has total debt of $8.84B and net debt of $7.84B. Total debt to equity ratio is 2.2x and Total debt to EBITDA is 5.8x, so debt is definitely high and one reason for lower valuations. OTEX is currently paying a decent yield of 2.77% and looking at payout ratio from free cash flow over the last twelve months is 37%. We do not think there is much risk in the dividend at these levels. While debt is high, interest coverage ratios are more comforting with an EBIT/Interest Expense of 1.5x and EBITDA/Interest Expense of 2.6x. So while debt is at high levels, OTEX is generating enough adjusted earnings to cover payments. OTEX is also expected to see high growth this year and is benefiting from AI tailwinds. While OTEX's current year outlook for growth is good, beyond, 2024 things are expected to slow. The decline in share price it has seen could be attributed partially to debt concerns but also investors shifting to other tech/AI options that have longer runways for growth.
OTEX shares some slight similarities with CSU and LMN just due to the broad software exposure that all the companies have. CSU of course has a huge suite of software offerings due to its acquisitive growth strategy so there is some overlap. OTEX has a significantly weaker balance sheet and growth outlook compared to CSU and LMN. While OTEX is very cheap right now, but it is fundementally weaker than the latter two and should be substantially cheaper.
Unlock Premium - Try 5i Free
Likes it here. Low organic growth rate historically. Recent demo of Navigator with embedded AI was impressive. Capable serial acquirer. Bread and butter are enterprise content-management platforms: recurring revenues, high retention, mission critical for the Global 10,000. Undemanding multiple. Compounds earnings in mid-teens. Value and growth.
Management deserves more credit. They made their biggest acquisition in history in 2022 which caused the stock to plummet. However they have managed to turn it around as they had claimed they could and are now getting some revenue growth from the acquisition.They have also paid down $2 billion in debt so have a better balance sheet. trades at 11X earnings.
Is growing this year, but long term and compared to peers lacks growth in the software consolidation space.
(A Top Pick May 18/23, Down 4%)
Laggard in the market with disappointing results. Organic growth has been slow. Continues to own shares. Serial acquirer to create growth. Recent M&A starting to pay off. Earnings per share expected to rise. 150 million global users. A.I. products expected to increase. Good long term investment.
Very strong business that has been proving itself. Recent weakness is share price has created major investment opportunity. Believes further upside in the stock. Debt levels coming down. Lots of opportunity going forward. Excellent vertical depth in business mode within sectors.
Open Text is a Canadian stock, trading under the symbol OTEX-T on the Toronto Stock Exchange (OTEX-CT). It is usually referred to as TSX:OTEX or OTEX-T
In the last year, 25 stock analysts published opinions about OTEX-T. 19 analysts recommended to BUY the stock. 4 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for Open Text.
Open Text was recommended as a Top Pick by on . Read the latest stock experts ratings for Open Text.
Earnings reports or recent company news can cause the stock price to drop. Read stock experts’ recommendations for help on deciding if you should buy, sell or hold the stock.
25 stock analysts on Stockchase covered Open Text In the last year. It is a trending stock that is worth watching.
On 2024-07-26, Open Text (OTEX-T) stock closed at a price of $43.55.
Other companies in the space make more sense to him. Getting into AI in a big way. Not impacted by today's market dive too much. He has a 12-month price target of $49.25. Add in thirds here around $43, $41, and $39. (Shouldn't go below $37.50.)
Last earnings beat on top and bottom lines, but not on margins (32% vs. expected 36-37%). Capex with so many companies has just ballooned, as they try to be competitive.