Open Text vs. DocuSign: Which Enterprise Content Management Stock is a Better Investment?

: DOCU | DocuSign, Inc. News, Ratings, and Charts

DOCU – SAAS stocks are one of the best-performing sectors of the past decade. They have high levels of retention, recurring revenue, and pricing power as companies’ operations become dependent on these software packages. Some of the most lucrative areas are cloud-based software, business applications, and automated solutions. Despite impressive gains over the past decade, these continue to have even more upside as many companies have yet to adapt these systems, and these companies are discovering new ways to increase monetization. Let’s segue into two specific enterprise content management stocks. Below, we highlight Open Text (OTEX) and DocuSign (DOCU).

SAAS stocks are one of the best-performing sectors of the past decade. They have high levels of retention, recurring revenue, and pricing power as companies’ operations become dependent on these software packages.
 
Some of the most lucrative areas are cloud-based software, business applications, and automated solutions. Despite impressive gains over the past decade, these continue to have even more upside as many companies have yet to adapt these systems, and these companies are discovering new ways to increase monetization.

 

Let’s segue into two specific enterprise content management stocks. Below, we highlight Open Text (OTEX) and DocuSign (DOCU).
 
OTEX

OTEX develops e-Business applications and is also an intranet/extranet innovator. Though few know it, OTEX’s masterminds created one of the first-ever internet search engines. OTEX empowers people and businesses to collaborate and ultimately grease the wheels of business.

OTEX has an A POWR Rating grade. The stock has an A Stability component grade along with B grades in the Quality, Sentiment, and Value components. Click here to find out how OTEX grades out in the rest of the POWR Ratings components such as Momentum and Growth.

Of the 146 stocks in the Software – Application space, OTEX is ranked second. You can find out more about the stocks in this segment by clicking here.

OTEX has a 0.94 beta so it is unlikely to make a drastic move should the market become especially volatile. OTEX has a forward P/E ratio of 15.42. This ratio indicates the stock is fairly valued at its current price or possibly even undervalued.

The analysts are OTEX believers, setting an average target price of $56.95 for the stock. If OTEX hits this price target, it will have increased by nearly 5%. The highest analyst price target for OTEX is $60. The lowest analyst target price for OTEX is $51.

OTEX’s average analyst price target has increased by $6.26 in the previous 51 weeks. In the past 14 months, the stock’s average upside potential has been 18.5%. Of the 11 analysts who have issued OTEX recommendations, one considers it a Strong Buy, might consider it a Buy, and two consider it a Hold.

DOCU

DOCU is a worldwide provider of software through the cloud. As an example, DOCU’s DocuSign Agreement Cloud facilitates the automation and connection of parties throughout the agreement process. DOCU’s e-signature agreement cloud product makes it that much easier for businesses to create, sign and manage digital agreements. These are just a couple of examples of DOCU’s value offering.

DOCU has a 177.37 forward P/E ratio. This ratio is egregiously high, indicating the stock is likely overvalued. DOCU is currently trading about $20 below its 52-week high of $314.76. The stock has a beta of 0.84, meaning it is likely to remain fairly stagnant unless the market takes off in either direction.

DOCU is a Hold as it has a C POWR Rating grade. The stock has B grades in the Quality, Sentiment, and Growth components of the POWR Ratings. However, DOCU has a D Value component grade. You can find out how DOCU fares in the remainder of the POWR Ratings components such as Stability and Momentum by clicking here.

DOCU is ranked 53rd out of the 146 stocks in the Software – Application space. Investors who are looking for more information about the stocks in this segment can find exactly that by clicking here.

In the past 40 weeks, the stock’s average analyst price target has increased by $35.42. The stock’s upside potential in the prior 15 months has been nearly 20%. A total of 22 analysts have issued recommendations for DOCU. Exactly nine analysts view DOCU as a Buy, another nine view it as a Strong Buy, and four view it as a Hold.

Which is the Better Investment?

DOCU certainly has its merits. However, OTEX is the better of these two enterprise content management stocks. Roll with OTEX moving forward and you will likely be quite pleased with the return on your investment.


DOCU shares fell $2.07 (-0.70%) in after-hours trading Thursday. Year-to-date, DOCU has gained 32.51%, versus a 22.01% rise in the benchmark S&P 500 index during the same period.


About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...


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