Open Text (OTEX) vs. Godaddy (GDDY) Financial Contrast

Open Text (NASDAQ:OTEX) and Godaddy (NYSE:GDDY) are both large-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Open Text and Godaddy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Open Text 0 1 6 0 2.86
Godaddy 1 2 8 0 2.64

Open Text currently has a consensus price target of $45.67, suggesting a potential upside of 17.64%. Godaddy has a consensus price target of $84.45, suggesting a potential upside of 6.67%. Given Open Text’s stronger consensus rating and higher probable upside, analysts plainly believe Open Text is more favorable than Godaddy.

Insider and Institutional Ownership

68.2% of Open Text shares are held by institutional investors. Comparatively, 98.6% of Godaddy shares are held by institutional investors. 10.6% of Open Text shares are held by company insiders. Comparatively, 7.6% of Godaddy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Open Text pays an annual dividend of $0.61 per share and has a dividend yield of 1.6%. Godaddy does not pay a dividend. Open Text pays out 67.0% of its earnings in the form of a dividend. Open Text has increased its dividend for 4 consecutive years.

Earnings & Valuation

This table compares Open Text and Godaddy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Open Text $2.82 billion 3.71 $242.22 million $0.91 42.66
Godaddy $2.66 billion 5.22 $77.10 million $0.63 125.67

Open Text has higher revenue and earnings than Godaddy. Open Text is trading at a lower price-to-earnings ratio than Godaddy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Open Text and Godaddy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Open Text 9.19% 7.00% 3.38%
Godaddy 2.90% 11.91% 1.40%

Risk & Volatility

Open Text has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, Godaddy has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Summary

Open Text beats Godaddy on 10 of the 17 factors compared between the two stocks.

About Open Text

Open Text Corporation provides a suite of software products and services. The company offers content services; digital process automation, which enables organizations to transform into digital and data-driven businesses through automation; and discovery suite that provides forensics and unstructured data analytics for searching, collecting, and investigating enterprise data to manage legal obligations and risk. It also provides business network solutions comprising business-to-business integration services, such as secure mail, large file transfer, fax, and electronic data interchange within a single platform; analytics solutions; and forensic security and automated cyber risk management software service. In addition, the company provides customer support programs that include access to software upgrades, a knowledge base, discussions, product information, and an online mechanism to post and review trouble tickets. Further, it offers professional services, such as consulting and learning services relating for the implementation, training, and integration of its licensed product offerings into the customers' systems; and cloud services that allow its customers to make use of its OpenText software, services, and content over Internet enabled networks. The company serves organizations, mid-market companies, and government agencies worldwide. It has strategic partnerships with SAP SE, Microsoft Corporation, Oracle Corporation, Salesforce.com Corporation, Accenture plc, Deloitte Consulting LLP, and others. Open Text Corporation was founded in 1991 and is headquartered in Waterloo, Canada.

About Godaddy

GoDaddy Inc. designs and develops cloud-based technology products for small businesses, Web design professionals, and individuals in the United States and internationally. The company provides domain name registration product that enables to engage customers at the initial stage of establishing a digital identity; and hosting products, including shared Website hosting, Website hosting on virtual private servers and virtual dedicated servers, managed hosting, and security. It also offers presence products, such as GoCentral, an online tool that enables customers to build Websites and online stores; a range of marketing tools designed to help businesses acquire and engage customers, as well as search engine optimization that helps customers get their Websites found on search sites; and social media management services. In addition, the company offers business application products, such as Microsoft Office 365, email accounts, email marketing, and telephony services. GoDaddy Inc. was incorporated in 2014 and is headquartered in Scottsdale, Arizona.

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