OTEX – Market expectations are for Uniform ROA to remain near lows, but management is confident about experience cloud, Cloud Editions, and their leverage ratio

April 30, 2021

  • Open Text Corporation (OTEX:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.9x Uniform P/E. At these levels, the market has expectations for profitability to remain near historical lows, but management is confident about their experience cloud integration, Cloud Editions 21.4, and their net leverage ratio
  • Specifically, management is confident MedPro Group represents a significant customer win and that they are providing superior omnichannel experiences through seamless integration with their experience cloud. In addition, they are confident they will sustain their quarterly dividend, they are only at the beginning of their Cloud Edition customer platform transition, and that their net leverage ratio for acquisitions is relatively conservative