Intrinsic value of Open Text - OTEX

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$33.96

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$33.96

 
Intrinsic value

$71.25

 
Up/down potential

+110%

 
Rating

str. buy

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of OTEX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 8.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.51
  16.80
  15.62
  14.56
  13.60
  12.74
  11.97
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
Revenue, $m
  1,824
  2,130
  2,463
  2,822
  3,206
  3,614
  4,047
  4,503
  4,982
  5,484
  6,009
  6,557
  7,127
  7,721
  8,339
  8,981
  9,648
  10,342
  11,062
  11,811
  12,590
  13,400
  14,243
  15,121
  16,035
  16,988
  17,981
  19,017
  20,098
  21,228
  22,407
Variable operating expenses, $m
 
  1,689
  1,916
  2,161
  2,424
  2,703
  2,998
  3,310
  3,638
  3,981
  4,340
  4,481
  4,871
  5,277
  5,699
  6,138
  6,594
  7,068
  7,561
  8,073
  8,605
  9,159
  9,735
  10,335
  10,960
  11,611
  12,290
  12,998
  13,737
  14,509
  15,315
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,456
  1,689
  1,916
  2,161
  2,424
  2,703
  2,998
  3,310
  3,638
  3,981
  4,340
  4,481
  4,871
  5,277
  5,699
  6,138
  6,594
  7,068
  7,561
  8,073
  8,605
  9,159
  9,735
  10,335
  10,960
  11,611
  12,290
  12,998
  13,737
  14,509
  15,315
Operating income, $m
  369
  442
  547
  661
  782
  911
  1,048
  1,193
  1,344
  1,503
  1,669
  2,075
  2,256
  2,444
  2,639
  2,843
  3,054
  3,273
  3,501
  3,739
  3,985
  4,241
  4,508
  4,786
  5,075
  5,377
  5,691
  6,019
  6,362
  6,719
  7,092
EBITDA, $m
  611
  751
  868
  995
  1,130
  1,274
  1,427
  1,588
  1,757
  1,934
  2,119
  2,312
  2,513
  2,722
  2,940
  3,167
  3,402
  3,646
  3,900
  4,164
  4,439
  4,725
  5,022
  5,331
  5,654
  5,990
  6,340
  6,705
  7,086
  7,485
  7,900
Interest expense (income), $m
  72
  83
  104
  127
  151
  177
  205
  234
  265
  297
  331
  367
  404
  442
  483
  524
  568
  613
  660
  709
  759
  812
  867
  924
  983
  1,045
  1,110
  1,177
  1,247
  1,320
  1,397
Earnings before tax, $m
  291
  358
  443
  534
  631
  734
  844
  959
  1,080
  1,206
  1,338
  1,709
  1,852
  2,002
  2,157
  2,318
  2,486
  2,660
  2,841
  3,030
  3,226
  3,429
  3,641
  3,862
  4,092
  4,332
  4,582
  4,842
  5,114
  5,399
  5,695
Tax expense, $m
  6
  97
  120
  144
  170
  198
  228
  259
  292
  326
  361
  461
  500
  540
  582
  626
  671
  718
  767
  818
  871
  926
  983
  1,043
  1,105
  1,170
  1,237
  1,307
  1,381
  1,458
  1,538
Net income, $m
  284
  262
  323
  390
  461
  536
  616
  700
  788
  880
  977
  1,247
  1,352
  1,461
  1,575
  1,692
  1,815
  1,942
  2,074
  2,212
  2,355
  2,503
  2,658
  2,819
  2,987
  3,162
  3,345
  3,535
  3,734
  3,941
  4,158

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,296
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,154
  4,504
  5,208
  5,966
  6,777
  7,641
  8,555
  9,519
  10,533
  11,594
  12,704
  13,862
  15,068
  16,324
  17,630
  18,987
  20,398
  21,864
  23,387
  24,971
  26,617
  28,330
  30,112
  31,968
  33,901
  35,915
  38,015
  40,205
  42,492
  44,879
  47,372
Adjusted assets (=assets-cash), $m
  3,858
  4,504
  5,208
  5,966
  6,777
  7,641
  8,555
  9,519
  10,533
  11,594
  12,704
  13,862
  15,068
  16,324
  17,630
  18,987
  20,398
  21,864
  23,387
  24,971
  26,617
  28,330
  30,112
  31,968
  33,901
  35,915
  38,015
  40,205
  42,492
  44,879
  47,372
Revenue / Adjusted assets
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
Average production assets, $m
  835
  976
  1,128
  1,292
  1,468
  1,655
  1,853
  2,062
  2,282
  2,512
  2,752
  3,003
  3,264
  3,536
  3,819
  4,113
  4,419
  4,736
  5,066
  5,410
  5,766
  6,137
  6,523
  6,925
  7,344
  7,780
  8,235
  8,710
  9,205
  9,722
  10,262
Working capital, $m
  1,001
  -334
  -387
  -443
  -503
  -567
  -635
  -707
  -782
  -861
  -943
  -1,029
  -1,119
  -1,212
  -1,309
  -1,410
  -1,515
  -1,624
  -1,737
  -1,854
  -1,977
  -2,104
  -2,236
  -2,374
  -2,518
  -2,667
  -2,823
  -2,986
  -3,155
  -3,333
  -3,518
Total debt, $m
  2,146
  2,669
  3,246
  3,869
  4,535
  5,244
  5,995
  6,786
  7,618
  8,490
  9,401
  10,352
  11,342
  12,373
  13,445
  14,560
  15,718
  16,921
  18,172
  19,472
  20,824
  22,230
  23,693
  25,217
  26,803
  28,457
  30,181
  31,980
  33,857
  35,816
  37,863
Total liabilities, $m
  3,175
  3,698
  4,275
  4,898
  5,564
  6,273
  7,024
  7,815
  8,647
  9,519
  10,430
  11,381
  12,371
  13,402
  14,474
  15,589
  16,747
  17,950
  19,201
  20,501
  21,853
  23,259
  24,722
  26,246
  27,832
  29,486
  31,210
  33,009
  34,886
  36,845
  38,892
Total equity, $m
  1,979
  806
  932
  1,068
  1,213
  1,368
  1,531
  1,704
  1,885
  2,075
  2,274
  2,481
  2,697
  2,922
  3,156
  3,399
  3,651
  3,914
  4,186
  4,470
  4,765
  5,071
  5,390
  5,722
  6,068
  6,429
  6,805
  7,197
  7,606
  8,033
  8,480
Total liabilities and equity, $m
  5,154
  4,504
  5,207
  5,966
  6,777
  7,641
  8,555
  9,519
  10,532
  11,594
  12,704
  13,862
  15,068
  16,324
  17,630
  18,988
  20,398
  21,864
  23,387
  24,971
  26,618
  28,330
  30,112
  31,968
  33,900
  35,915
  38,015
  40,206
  42,492
  44,878
  47,372
Debt-to-equity ratio
  1.084
  3.310
  3.480
  3.620
  3.740
  3.830
  3.910
  3.980
  4.040
  4.090
  4.130
  4.170
  4.210
  4.230
  4.260
  4.280
  4.300
  4.320
  4.340
  4.360
  4.370
  4.380
  4.400
  4.410
  4.420
  4.430
  4.440
  4.440
  4.450
  4.460
  4.470
Adjusted equity ratio
  0.177
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  284
  262
  323
  390
  461
  536
  616
  700
  788
  880
  977
  1,247
  1,352
  1,461
  1,575
  1,692
  1,815
  1,942
  2,074
  2,212
  2,355
  2,503
  2,658
  2,819
  2,987
  3,162
  3,345
  3,535
  3,734
  3,941
  4,158
Depreciation, amort., depletion, $m
  242
  309
  321
  334
  348
  363
  379
  395
  412
  430
  449
  236
  257
  278
  301
  324
  348
  373
  399
  426
  454
  483
  514
  545
  578
  613
  648
  686
  725
  766
  808
Funds from operations, $m
  533
  571
  645
  724
  809
  899
  994
  1,095
  1,200
  1,311
  1,426
  1,484
  1,609
  1,740
  1,875
  2,016
  2,163
  2,315
  2,473
  2,638
  2,809
  2,987
  3,172
  3,365
  3,565
  3,775
  3,993
  4,221
  4,458
  4,706
  4,966
Change in working capital, $m
  7
  -48
  -52
  -56
  -60
  -64
  -68
  -72
  -75
  -79
  -82
  -86
  -90
  -93
  -97
  -101
  -105
  -109
  -113
  -118
  -122
  -127
  -132
  -138
  -144
  -150
  -156
  -163
  -170
  -177
  -185
Cash from operations, $m
  526
  614
  697
  780
  869
  963
  1,062
  1,167
  1,276
  1,390
  1,509
  1,570
  1,699
  1,833
  1,972
  2,117
  2,268
  2,424
  2,586
  2,755
  2,931
  3,114
  3,304
  3,502
  3,709
  3,924
  4,149
  4,383
  4,628
  4,884
  5,151
Maintenance CAPEX, $m
  0
  -66
  -77
  -89
  -102
  -116
  -130
  -146
  -162
  -180
  -198
  -217
  -236
  -257
  -278
  -301
  -324
  -348
  -373
  -399
  -426
  -454
  -483
  -514
  -545
  -578
  -613
  -648
  -686
  -725
  -766
New CAPEX, $m
  -70
  -141
  -152
  -164
  -176
  -187
  -198
  -209
  -220
  -230
  -240
  -251
  -261
  -272
  -283
  -294
  -306
  -318
  -330
  -343
  -357
  -371
  -386
  -402
  -419
  -436
  -455
  -475
  -495
  -517
  -540
Cash from investing activities, $m
  -361
  -207
  -229
  -253
  -278
  -303
  -328
  -355
  -382
  -410
  -438
  -468
  -497
  -529
  -561
  -595
  -630
  -666
  -703
  -742
  -783
  -825
  -869
  -916
  -964
  -1,014
  -1,068
  -1,123
  -1,181
  -1,242
  -1,306
Free cash flow, $m
  165
  408
  468
  527
  592
  661
  734
  812
  894
  980
  1,070
  1,102
  1,201
  1,304
  1,411
  1,522
  1,638
  1,758
  1,883
  2,013
  2,148
  2,289
  2,435
  2,587
  2,745
  2,910
  3,081
  3,260
  3,447
  3,642
  3,845
Issuance/(repayment) of debt, $m
  592
  531
  578
  622
  666
  709
  751
  792
  832
  872
  911
  951
  990
  1,031
  1,072
  1,114
  1,158
  1,204
  1,251
  1,300
  1,352
  1,406
  1,463
  1,523
  1,587
  1,654
  1,724
  1,798
  1,877
  1,960
  2,047
Issuance/(repurchase) of shares, $m
  -56
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  529
  531
  578
  622
  666
  709
  751
  792
  832
  872
  911
  951
  990
  1,031
  1,072
  1,114
  1,158
  1,204
  1,251
  1,300
  1,352
  1,406
  1,463
  1,523
  1,587
  1,654
  1,724
  1,798
  1,877
  1,960
  2,047
Total cash flow (excl. dividends), $m
  683
  939
  1,045
  1,150
  1,258
  1,370
  1,485
  1,603
  1,726
  1,852
  1,982
  2,053
  2,191
  2,335
  2,483
  2,637
  2,796
  2,962
  3,134
  3,313
  3,500
  3,695
  3,898
  4,110
  4,332
  4,563
  4,805
  5,059
  5,324
  5,602
  5,892
Retained Cash Flow (-), $m
  -150
  -115
  -126
  -136
  -145
  -155
  -164
  -173
  -181
  -190
  -199
  -207
  -216
  -225
  -234
  -243
  -253
  -262
  -273
  -283
  -295
  -307
  -319
  -332
  -346
  -361
  -376
  -392
  -409
  -427
  -446
Prev. year cash balance distribution, $m
 
  1,288
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,111
  919
  1,014
  1,113
  1,215
  1,321
  1,431
  1,544
  1,662
  1,783
  1,846
  1,975
  2,110
  2,249
  2,394
  2,544
  2,699
  2,861
  3,030
  3,205
  3,388
  3,579
  3,778
  3,986
  4,203
  4,430
  4,667
  4,915
  5,174
  5,446
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  2,024
  842
  883
  916
  942
  959
  967
  965
  955
  935
  876
  843
  802
  755
  703
  646
  587
  527
  467
  407
  350
  297
  248
  203
  163
  129
  100
  76
  56
  41
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Open Text Corporation provides a suite of software products and services that assist organizations in finding, utilizing, and sharing business information from various devices. The company offers enterprise content management products that provide content and records management, archiving, and email management and capture solutions, as well as Core, a software as a multi-tenant cloud solution; business process management for analyzing, automating, monitoring, and optimizing structured business processes; and customer experience management products, which offer Web content management, digital asset management, customer communications management, social software, and portal. Its products also comprise business network solutions comprising business-to-business integration, fax solutions, and secure messaging; analytics solutions, including embedded reporting and visualization, and big data analysis; and discovery solutions consisting of search, semantic navigation, and auto classification, as well as InfoFusion to deal with the issue of ‘information silos’ resulting from disconnected information sources across the enterprise. In addition, the company provides customer support programs that include access to software upgrades, a knowledge base, discussions, product information, and an online mechanism to post and review trouble tickets. Further, it offers professional services, such as consulting and learning services relating to the implementation, training, and integration of its product offerings into the customer’s systems; and cloud services that allow its customers to make use of its OpenText software, services, and content over Internet enabled networks. The company serves organizations, mid-market companies, and government agencies worldwide. It has strategic partnerships with SAP AG, Microsoft Corporation, Oracle Corporation, Accenture plc, Deloitte Consulting LLP, and others. Open Text Corporation was founded in 1991 and is headquartered in Waterloo, Canada.

FINANCIAL RATIOS  of  Open Text (OTEX)

Valuation Ratios
P/E Ratio 29
Price to Sales 4.5
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 15.7
Price to Free Cash Flow 18.1
Growth Rates
Sales Growth Rate -1.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.1%
Cap. Spend. - 3 Yr. Gr. Rate 24.9%
Financial Strength
Quick Ratio 162
Current Ratio 0
LT Debt to Equity 108%
Total Debt to Equity 108.4%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 7.6%
Ret/ On T. Cap. - 3 Yr. Avg. 8%
Return On Equity 14.9%
Return On Equity - 3 Yr. Avg. 14.3%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 68.5%
Gross Margin - 3 Yr. Avg. 68.3%
EBITDA Margin 33.2%
EBITDA Margin - 3 Yr. Avg. 30.8%
Operating Margin 20.2%
Oper. Margin - 3 Yr. Avg. 19.2%
Pre-Tax Margin 16%
Pre-Tax Margin - 3 Yr. Avg. 15.8%
Net Profit Margin 15.6%
Net Profit Margin - 3 Yr. Avg. 13.9%
Effective Tax Rate 2.1%
Eff/ Tax Rate - 3 Yr. Avg. 11.8%
Payout Ratio 34.9%

OTEX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OTEX stock intrinsic value calculation we used $1824 million for the last fiscal year's total revenue generated by Open Text. The default revenue input number comes from 2016 income statement of Open Text. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our OTEX stock valuation model: a) initial revenue growth rate of 16.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for OTEX is calculated based on our internal credit rating of Open Text, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Open Text.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of OTEX stock the variable cost ratio is equal to 81.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for OTEX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.9% for Open Text.

Corporate tax rate of 27% is the nominal tax rate for Open Text. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the OTEX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for OTEX are equal to 45.8%.

Life of production assets of 12.7 years is the average useful life of capital assets used in Open Text operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for OTEX is equal to -15.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1979 million for Open Text - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 263.158 million for Open Text is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Open Text at the current share price and the inputted number of shares is $8.9 billion.


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Stock chart of OTEX Financial statements of OTEX
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The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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