As of May 27, 2025, Open Text Corp has a Discounted Cash Flow (DCF) derived fair value of $65.23 per share. With the current market price at $38.35, this represents a potential upside of 70.1%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $59.67 |
| DCF Fair Value (10-year) | $65.23 |
| Potential Upside (5-year) | 55.6% |
| Potential Upside (10-year) | 70.1% |
| Discount Rate (WACC) | 6.7% - 8.4% |
Revenue is projected to grow from $5770 million in 06-2024 to $7350 million by 06-2034, representing a compound annual growth rate of approximately 2.4%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 06-2024 | 5770 | 29% |
| 06-2025 | 5310 | -8% |
| 06-2026 | 5420 | 2% |
| 06-2027 | 5525 | 2% |
| 06-2028 | 5658 | 2% |
| 06-2029 | 5834 | 3% |
| 06-2030 | 6141 | 5% |
| 06-2031 | 6368 | 4% |
| 06-2032 | 6495 | 2% |
| 06-2033 | 6933 | 7% |
| 06-2034 | 7350 | 6% |
Net profit margin is expected to improve from 8% in 06-2024 to 9% by 06-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 06-2024 | 465 | 8% |
| 06-2025 | 456 | 9% |
| 06-2026 | 465 | 9% |
| 06-2027 | 474 | 9% |
| 06-2028 | 486 | 9% |
| 06-2029 | 501 | 9% |
| 06-2030 | 527 | 9% |
| 06-2031 | 547 | 9% |
| 06-2032 | 558 | 9% |
| 06-2033 | 595 | 9% |
| 06-2034 | 631 | 9% |
with a 5-year average of $103 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 06-2025 | 114 |
| 06-2026 | 128 |
| 06-2027 | 137 |
| 06-2028 | 141 |
| 06-2029 | 138 |
| 06-2030 | 142 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 51 |
| Days Inventory | 0 |
| Days Payables | 40 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 3M/2025 | 312 | 54 | 33 | 10 | 215 |
| 2026 | 1284 | 220 | 134 | 29 | 901 |
| 2027 | 1315 | 224 | 137 | (28) | 982 |
| 2028 | 1347 | 230 | 140 | 35 | 941 |
| 2029 | 1381 | 237 | 145 | 18 | 981 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 59.67 | 55.6% |
| 10-Year DCF (Growth) | 65.23 | 70.1% |
| 5-Year DCF (EBITDA) | 101.08 | 163.6% |
| 10-Year DCF (EBITDA) | 101.53 | 164.7% |
Is Open Text Corp (OTEX.TO) a buy or a sell? Open Text Corp is definitely a buy. Based on our DCF analysis, Open Text Corp (OTEX.TO) appears to be significantly undervalued with upside potential of 70.1%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $38.35.