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Technology Stocks : Open Text

OTEX 33.67

-1.8%

Nov 14 9:30 AM EST

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To: gutsy who wrote (208)	1/17/1997 1:16:00 AM
From: Tyler Lawton	of 1195

I'm an English major, maybe you could give it to me in layman's terms. What is this chart saying? I'd really appreciate it as I'm long on OTEXF. Thanks a million. Zacks is an investment research firm. The company tracks what all of the other analysts are saying and puts the data together in a nice report. They also throw their two cents in based on some statistical analysis done with computers. Remember I'm the Livelink technical guy, not an analyst but what the first set of numbers says is Open Text is going to outperform the stocks in the S&P 500 by more than 5 to 1 (40% growth to 7.9%) and outperform the other companies in their industry (40% to 33%) over the next 5 years. The stock price should at least track the earnings growth in most cases. It also says the average Price to Earnings ratio in their industry (software) is 59.3 to 1 meaning the price of the stock is 59 times what the company is earning which is very high. But, if the company is growing fast, that P/E will come down quickly as earnings expand. The average PE Ratio in the S&P 500 is 18.8 which is about normal for most stocks. Open Text is -9.3 meaning their price is way under even the most conservative stocks. The next set of numbers shows the analysts best guess as to what Open Text will earn in the next two years. The consensus is they are going to lose $.86 cents a share this fiscal year which ends in June. Then, they are going to make $.42 cents a share over the next 12 months. That is tremendous growth and the stock price will reflect that over time. The next set of data shows there are two analyst covering Open Text. They both have strong buy recommendations out. Zacks ranks them a hold. Zacks rankings are based on computer analysis which means they are not taking into account the special factors in Open Text's favor. The last set of numbers is just a graphical representation of the second set of numbers. Summary: They are going to kick some butt the next five years for reasons we have already discussed.

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