Are Investors Undervaluing Open Text (OTEX) Right Now?
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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Open Text (OTEX). OTEX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. OTEX has a P/S ratio of 1.54. This compares to its industry's average P/S of 4.46.
Finally, we should also recognize that OTEX has a P/CF ratio of 6.93. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 22.53. Over the past 52 weeks, OTEX's P/CF has been as high as 11.75 and as low as 5.96, with a median of 8.61.
These are just a handful of the figures considered in Open Text's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that OTEX is an impressive value stock right now.
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Open Text Corporation (OTEX) : Free Stock Analysis Report