As of December 15, 2025, Open Text Corp's estimated intrinsic value ranges from $25.10 to $74.88 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $72.73 | +59.1% |
| Discounted Cash Flow (5Y) | $59.41 | +30.0% |
| Dividend Discount Model (Multi-Stage) | $25.10 | -45.1% |
| Dividend Discount Model (Stable) | $33.95 | -25.7% |
| Earnings Power Value | $74.88 | +63.9% |
Is Open Text Corp (OTEX.TO) undervalued or overvalued?
With the current market price at $45.70, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Open Text Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.16 | 1.24 |
| Cost of equity | 9.1% | 11.7% |
| Cost of debt | 6.1% | 6.3% |
| Tax rate | 28.4% | 33.7% |
| Debt/Equity ratio | 0.76 | 0.76 |
| After-tax WACC | 7.0% | 8.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $43 | $16,162M | 79.8% |
| 10-Year Growth | $53 | $18,598M | 65.3% |
| 5-Year EBITDA | $47 | $17,179M | 81.0% |
| 10-Year EBITDA | $57 | $19,550M | 67.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,458M |
| Discount Rate (WACC) | 8.5% - 7.0% |
| Enterprise Value | $17,234M - $20,750M |
| Net Debt | $5,289M |
| Equity Value | $11,944M - $15,460M |
| Outstanding Shares | 252M |
| Fair Value | $47 - $61 |
| Selected Fair Value | $74.88 |
| Metric | Value |
|---|---|
| Market Capitalization | $11517M |
| Enterprise Value | $18802M |
| Trailing P/E | 16.79 |
| Forward P/E | 23.32 |
| Trailing EV/EBITDA | 15.85 |
| Current Dividend Yield | 323.68% |
| Dividend Growth Rate (5Y) | 6.55% |
| Debt-to-Equity Ratio | 0.76 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $21.82 |
| Discounted Cash Flow (5Y) | 25% | $14.85 |
| Dividend Discount Model (Multi-Stage) | 20% | $5.02 |
| Dividend Discount Model (Stable) | 15% | $5.09 |
| Earnings Power Value | 10% | $7.49 |
| Weighted Average | 100% | $54.27 |
Based on our comprehensive valuation analysis, Open Text Corp's intrinsic value is $54.27, which is approximately 18.8% above the current market price of $45.70.
Key investment considerations:
Given these factors, we believe Open Text Corp is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.