June 20, 2024
Top 10 Stock Open Text 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 Human Rights Leaders
Open Text is listed as a top 10 stock on June 20, 2024 in the market index Human Rights 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, despite a currently slow growth momentum. Based on the Obermatt 360° View of 64 (high 64% performer), Obermatt assesses an overall buy recommendation for Open Text on June 20, 2024.
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 Buy
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| SENTIMENT | ||||||||
| SENTIMENT | 68 |
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| 360° VIEW | ||||||||
| 360° VIEW | 64 |
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ANALYSIS: With an Obermatt 360° View of 64 (better than 64% compared with alternatives), overall professional sentiment and financial characteristics for the stock Open Text are above average. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half 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 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 company is also safely financed with a Safety rank of 65. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 68. But the consolidated Growth Rank has a low rank of 1, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 99 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 64, Open Text is better positioned than 64% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 100), secure financing practices (Safety Rank of 65), and positive market sentiment in the professional investor community (Sentiment Rank of 68). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 1), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Open Text is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Open Text positive
ANALYSIS: With an Obermatt Sentiment Rank of 68 (better than 68% 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 81 (better than 81% 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 66, which means that currently, professional investors hold more stock in this company than in 66% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 68 (more positive than 68% 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 41, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 59% 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 2024, 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 84 which means that the stock price compared with what market professionals expect for future sales is lower than for 84% 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 97% 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 76. Compared with other companies in the same industry, dividend yields of Open Text are expected to be higher than for 96% of all competitors (a Dividend Yield rank of 96). ...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 negative
ANALYSIS: With an Obermatt Growth Rank of 1 (better than 1% compared with alternatives), Open Text shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for Open Text. While Profit Growth has a good rank of 56, as professionals currently expect the company to grow its profits more than 56% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 1, which means that currently professionals expect the company to grow less than 99% of its competitors, while Capital Growth has a rank of 6 and Stock Returns have been below market median, with a rank of 22 (78% of alternative investments were better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 1, is a sell recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. ...read more
Safety Strategy: Open Text Debt Financing Safety above-average
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 21 |
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| REFINANCING | ||||||||
| REFINANCING | 76 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 62 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
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ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company Open Text has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Open Text is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Open Text. Refinancing is at 76, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 76% of its competitors. Liquidity is also good at 62, meaning the company generates more profit to service its debt than 62% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 21, which means the company has an above-average debt-to-equity ratio. It has more debt than 79% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), Open Text has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Open Text could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Open Text Above-Average Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 62 |
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| COMBINED | ||||||||
| COMBINED | 58 |
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ANALYSIS: With an Obermatt Combined Rank of 58 (better than 58% compared with investment alternatives), Open Text (Application Software, Canada) shares have above-average financial characteristics compared with similar stocks. Shares of Open Text are a good value (attractively priced) with a consolidated Value Rank of 100 (better than 100% of alternatives), are safely financed (Safety Rank of 65, which means low debt burdens), but show below-average growth (Growth Rank of 1). ...read more
RECOMMENDATION: A Combined Rank of 58, is a buy recommendation based on Open Text's financial characteristics. As the company Open Text's key financial metrics exhibit good value (Obermatt Value Rank of 100) but low growth (Obermatt Growth Rank of 1) while being safely financed (Obermatt Safety Rank of 65), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 100% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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