December 14, 2023
Top 10 Stock Open Text Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Open Text – Top 10 Stock in SDG 13: Climate Action
Open Text is listed as a top 10 stock on December 14, 2023 in the market index SDG 13 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 93 (top 93% performer), Obermatt assesses an overall strong buy recommendation for Open Text on December 14, 2023.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Application Software |
| Index | Human Rights, SDG 13, SDG 2, SDG 3, SDG 4, SDG 5, NASDAQ, TSX Composite |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Open Text Strong Buy
| 360 METRICS | December 14, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 75 |
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| SAFETY | ||||||||
| SAFETY | 26 |
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| SENTIMENT | ||||||||
| SENTIMENT | 70 |
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| 360° VIEW | ||||||||
| 360° VIEW | 93 |
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ANALYSIS: With an Obermatt 360° View of 93 (better than 93% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock Open Text are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Open Text. The consolidated Value Rank has an attractive rank of 100, which means that the share price of Open Text is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 100% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 75, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 70. But the company’s financing is risky with a Safety rank of 26. This means 74% of comparable companies have a safer financing structure than Open Text. ...read more
RECOMMENDATION: With a consolidated 360° View of 93, Open Text is better positioned than 93% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 100), above-average growth (Growth Rank of 75), and positive market sentiment in the professional investor community (Sentiment Rank of 70), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 26), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Open Text is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Open Text positive
ANALYSIS: With an Obermatt Sentiment Rank of 70 (better than 70% compared with alternatives), overall professional sentiment and engagement for the stock Open Text is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Open Text. Analyst Opinions are at a rank of 95 (better than 95% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 50, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in Open Text. Finally, the Professional Investors rank is 76, which means that currently, professional investors hold more stock in this company than in 76% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 70 (more positive than 70% compared with investment alternatives), Open Text has a reputation among professional investors that is above-average compared with that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 27, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 73% of competitors). This could mean future risks and should make investors careful. Attention to negative news for Open Text is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: Open Text Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 100 (better than 100% compared with alternatives) for 2023, Open Text shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Open Text. Price-to-Sales is 75 which means that the stock price compared with what market professionals expect for future sales is lower than for 75% of comparable companies, indicating a good value for Open Text's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 94% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 62. Compared with other companies in the same industry, dividend yields of Open Text are expected to be higher than for 98% of all competitors (a Dividend Yield rank of 98). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 100, is a buy recommendation based on Open Text's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Open Text based on its detailed value metrics.
Growth Strategy: Open Text Growth Momentum high
| GROWTH METRICS | December 14, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 10 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 63 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 100 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 75 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 75 |
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ANALYSIS: With an Obermatt Growth Rank of 75 (better than 75% compared with alternatives) for 2023, Open Text shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Open Text. Profit Growth has a rank of 63 which means that currently professionals expect the company to grow its profits more than 63% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 100, and Stock Returns has a rank of 75 which means that the stock returns have recently been above 75% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 10 (90% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 75, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Open Text Debt Financing Safety below-average
| SAFETY METRICS | December 14, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 22 |
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| REFINANCING | ||||||||
| REFINANCING | 7 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 72 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 26 |
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ANALYSIS: With an Obermatt Safety Rank of 26 (better than 26% compared with alternatives), the company Open Text has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Open Text is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Open Text. Liquidity is at 72, meaning the company generates more profit to service its debt than 72% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 7, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 93% of its competitors. Leverage is also high at a rank of 22, which means that the company has an above-average debt-to-equity ratio. It has more debt than 78% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 26 (worse than 74% compared with alternatives), Open Text has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Open Text Top Financial Performance
| COMBINED PERFORMANCE | December 14, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 75 |
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| SAFETY | ||||||||
| SAFETY | 72 |
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| COMBINED | ||||||||
| COMBINED | 90 |
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ANALYSIS: With an Obermatt Combined Rank of 90 (better than 90% compared with investment alternatives), Open Text (Application Software, Canada) shares have much better financial characteristics than comparable stocks. Shares of Open Text are a good value (attractively priced) with a consolidated Value Rank of 100 (better than 100% of alternatives), show above-average growth (Growth Rank of 75) but are riskily financed (Safety Rank of 26), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 90, is a strong buy recommendation based on Open Text's financial characteristics. As the company Open Text's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 100) and above-average growth (Obermatt Growth Rank of 75), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 26) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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