Critical Comparison: Open Text (NASDAQ:OTEX) versus Blackbaud (NASDAQ:BLKB)

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

Institutional & Insider Ownership

70.4% of Open Text shares are held by institutional investors. Comparatively, 94.2% of Blackbaud shares are held by institutional investors. 10.6% of Open Text shares are held by company insiders. Comparatively, 2.0% of Blackbaud shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Open Text and Blackbaud”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Open Text	$5.17 billion	1.73	$435.87 million	$1.65	21.28
Blackbaud	$1.16 billion	2.88	-$283.17 million	($5.78)	-11.87

Open Text has higher revenue and earnings than Blackbaud. Blackbaud 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 Open Text and Blackbaud’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Open Text	8.43%	22.52%	6.72%
Blackbaud	-24.82%	61.72%	5.07%

Risk and Volatility

Open Text has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500. Comparatively, Blackbaud has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Open Text and Blackbaud, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Open Text	1	7	2	0	2.10
Blackbaud	0	3	1	0	2.25

Open Text currently has a consensus price target of $33.10, suggesting a potential downside of 5.72%. Blackbaud has a consensus price target of $78.67, suggesting a potential upside of 14.71%. Given Blackbaud’s stronger consensus rating and higher possible upside, analysts plainly believe Blackbaud is more favorable than Open Text.

Summary

Open Text beats Blackbaud on 9 of the 14 factors compared between the two stocks.

About Open Text

Open Text Corporation provides information management software and solutions. The company offers content services, which includes content collaboration and intelligent capture to records management, collaboration, e-signatures, and archiving; and operates experience cloud platform that provides customer experience and web content management, digital asset management, customer analytics, AI and insights, e-discovery, digital fax, omnichannel communications, secure messaging, and voice of customer, as well as customer journey, testing, and segmentation. It also provides cybersecurity cloud solutions to protect, prevent, detect, respond and quickly recover from threats across endpoints, network, applications, IT infrastructure and data, AI-led threat intelligence; and to protect critical information and processes through threat intelligence, forensics, identity, encryption, and cloud-based application security. In addition, the company offers business network cloud for digital supply chains and secure e-commerce ecosystems including digitize and automate procure-to-pay and order-to-cash processes; IT operations management cloud for automation and advancement of IT support and asset management; and analytics & AI cloud solutions that offers artificial intelligence with practical usage to provide organizations with actionable insights and better automation, such as visualizations, advanced natural language processing and understanding, and integrated computer vision capabilities. In addition, it provides application automation cloud, developers cloud, and services. Further, it has strategic partnerships with SAP SE, Google Cloud, Amazon AWS, Microsoft Corporation, Oracle Corporation, Salesforce.com Corporation, DXC Technology Company, Accenture plc, Capgemini Technology Services SAS, Deloitte Consulting LLP, Hewlett Packard Enterprises, and Tata Consultancy Services. Open Text Corporation was incorporated in 1991 and is headquartered in Waterloo, Canada.

About Blackbaud

Blackbaud, Inc. provides cloud software solutions to nonprofits, foundations, education institutions, and healthcare organizations in the United States and internationally. The company offers fundraising and engagement solutions, such as Blackbaud Raiser's Edge NXT, Blackbaud CRM, Blackbaud eTapestry, Blackbaud Luminate Online, Blackbaud TeamRaiser, JustGiving, Blackbaud Fundraiser Performance Management, Blackbaud Guided Fundraising, and Blackbaud Altru; and financial management solutions comprising Blackbaud Financial Edge NXT, Blackbaud Tuition Management, and Blackbaud Financial Aid and Billing Management. It also provides grant and award management solutions, consisting of Blackbaud Grantmaking and Blackbaud Award Management; education solutions, such as Blackbaud Student Information System, Blackbaud Learning Management System, Blackbaud Enrollment Management System, and Blackbaud School Website System; social responsibility solutions, which includes YourCause GrantsConnect and YourCause CSRconnect, and EVERFI; Blackbaud Merchant Services and Blackbaud Purchase Cards payment services; and Blackbaud's Intelligence for Good solutions, as well as Data Health, Insights, and Performance solutions and services. The company sells its solutions and related services through its direct sales force. Blackbaud, Inc. was founded in 1981 and is headquartered in Charleston, South Carolina.