Critical Review: The Descartes Systems Group (DSGX) and Open Text Corporation (NASDAQ:OTEX)
The Descartes Systems Group (NASDAQ: DSGX) and Open Text Corporation (NASDAQ:OTEX) are both mid-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitabiliy, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.
This table compares The Descartes Systems Group and Open Text Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Descartes Systems Group||11.80%||5.78%||4.99%|
|Open Text Corporation||44.77%||8.92%||4.29%|
This is a breakdown of recent recommendations for The Descartes Systems Group and Open Text Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Descartes Systems Group||0||2||7||0||2.78|
|Open Text Corporation||0||1||8||0||2.89|
The Descartes Systems Group currently has a consensus price target of $33.00, suggesting a potential upside of 24.53%. Open Text Corporation has a consensus price target of $42.63, suggesting a potential upside of 29.88%. Given Open Text Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Open Text Corporation is more favorable than The Descartes Systems Group.
Institutional and Insider Ownership
77.6% of The Descartes Systems Group shares are held by institutional investors. Comparatively, 67.8% of Open Text Corporation shares are held by institutional investors. 0.3% of The Descartes Systems Group shares are held by insiders. Comparatively, 10.6% of Open Text Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Open Text Corporation pays an annual dividend of $0.53 per share and has a dividend yield of 1.6%. The Descartes Systems Group does not pay a dividend. Open Text Corporation pays out 12.7% of its earnings in the form of a dividend.
Valuation and Earnings
This table compares The Descartes Systems Group and Open Text Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|The Descartes Systems Group||$209.38 million||9.61||$70.06 million||$0.33||80.31|
|Open Text Corporation||$2.11 billion||4.09||$594.15 million||$4.16||7.89|
Open Text Corporation has higher revenue and earnings than The Descartes Systems Group. Open Text Corporation is trading at a lower price-to-earnings ratio than The Descartes Systems Group, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
The Descartes Systems Group has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, Open Text Corporation has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500.
Open Text Corporation beats The Descartes Systems Group on 10 of the 16 factors compared between the two stocks.
The Descartes Systems Group Company Profile
Descartes Systems Group Inc (Descartes) is a Canada-based global provider of federated network and global logistics technology solutions that help its customers make and receive shipments and manage related resources. The Company’s network-based solutions, which primarily consist of services and software, connect people to their trading partners and enable business document exchange (bookings, bills of lading, status messages); regulatory compliance and customs filing; route and resource planning, execution and monitoring; access and leverage global trade and restricted party data; inventory and asset visibility; rate and transportation management, and warehouse operations. The Company’s solutions include Logistics Technology Platform that fuses the Descartes Global Logistics Network (Descartes GLN); customs and regulatory compliance; routing, mobile and telematics; global logistics network services; transportation management, and broker and forwarder enterprise systems.
Open Text Corporation Company Profile
Open Text Corporation provides a platform and suite of software products and services that assist organizations in finding, utilizing, and sharing business information from any device. The Company designs, develops, markets and sells Enterprise Information Management (EIM) software and solutions. Its EIM offerings include Enterprise Content Management (ECM), Business Process Management (BPM), Customer Experience Management (CEM), Business Network, Discovery and Analytics. Its software and services allow organizations to manage the information that flows into, out of, and throughout the enterprise as part of daily operations. Its solutions incorporate collaborative and mobile technologies and are delivered for on-premises deployment, as well as through cloud, hybrid and managed hosted services models. In addition, the Company provides solutions that facilitate the exchange of information and transactions that occur between supply chain participants.
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