Analyzing Cerner (CERN) & Open Text (OTEX)

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Cerner (NASDAQ: OTEX) and Open Text (NASDAQ:OTEX) are both large-cap medical companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cerner $5.14 billion 4.20 $866.97 million $2.20 29.83
Open Text $2.82 billion 3.68 $242.22 million $0.91 42.48

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

Profitability

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

Net Margins Return on Equity Return on Assets
Cerner 16.06% 15.26% 11.34%
Open Text 8.60% 8.09% 3.81%

Dividends

Open Text pays an annual dividend of $0.61 per share and has a dividend yield of 1.6%. Cerner 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 3 consecutive years.

Insider & Institutional Ownership

80.4% of Cerner shares are owned by institutional investors. Comparatively, 67.6% of Open Text shares are owned by institutional investors. 4.7% of Cerner shares are owned by insiders. Comparatively, 10.6% of Open Text shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Cerner has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Open Text has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Cerner and Open Text, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cerner 0 6 11 0 2.65
Open Text 1 0 8 0 2.78

Cerner currently has a consensus target price of $71.90, suggesting a potential upside of 9.55%. Open Text has a consensus target price of $44.60, suggesting a potential upside of 15.36%. Given Open Text’s stronger consensus rating and higher possible upside, analysts clearly believe Open Text is more favorable than Cerner.

Summary

Cerner beats Open Text on 11 of the 17 factors compared between the two stocks.

About Cerner

Cerner Corporation provides health care information technology solutions and services in the United States and internationally. The company offers Cerner Millennium architecture, a person-centric computing framework, which includes clinical, financial, and management information systems that allow providers to access an individual's electronic health record (EHR) at the point of care, and organizes and delivers information for physicians, nurses, laboratory technicians, pharmacists, front- and back-office professionals, and consumers. It also provides HealtheIntent platform, a cloud-based platform that enables organizations to aggregate, transform, and reconcile data across the continuum of care, as well as EHR agnostic platform, CareAware, that facilitates connectivity of health care devices to EHRs. In addition, the company offers a portfolio of clinical and financial health care information technology solutions, as well as departmental, connectivity, population health, and care coordination solutions; and various complementary services, including support, hosting, managed, implementation, and strategic consulting services. Further, it provides various services, such as implementation and training, remote hosting, operational management, revenue cycle, support and maintenance, health care data analysis, clinical process optimization, transaction processing, employer health centers, employee wellness programs, and third party administrator services for employer-based health plans; and complementary hardware and devices for third parties. It serves integrated delivery networks, physician groups and networks, managed care organizations, hospitals, medical centers, reference laboratories, home health agencies, blood banks, imaging centers, pharmacies, pharmaceutical manufacturers, employers, governments, and public health organizations. Cerner Corporation was founded in 1979 and is headquartered in North Kansas City, Missouri.

About Open Text

Open Text Corporation provides a suite of software products and services that assist organizations in finding, utilizing, and sharing business information from various devices. The company offers content solutions that provide content and records management, archiving, and email management and capture solutions, as well as Core, a software as a service based multi-tenant cloud solution; business process management for analyzing, automating, monitoring, and optimizing structured business processes; and customer experience management products, which offer Web content management, digital asset management, customer communications management, social software, and portal. Its products also include business network solutions comprising business-to-business integration, fax solutions, and secure messaging; analytics solutions, including embedded reporting and visualization, and big data analysis; and discovery solutions consisting of search, semantic navigation, and auto classification, as well as InfoFusion to deal with the issue of ?information silos' resulting from disconnected information sources across the enterprise. 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 product offerings into the customer's 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, Accenture plc, Deloitte Consulting LLP, and others. Open Text Corporation was founded in 1991 and is headquartered in Waterloo, Canada.

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