We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. This article by Simply Wall St is general in nature. Alternatively, email editorial-team (at). Have feedback on this article? Concerned about the content? Get in touch with us directly. So take a peek at this free list of interesting companies with high ROE and low debt. So I think it may be worth checking this free report on analyst forecasts for the company.īut note: Open Text may not be the best stock to buy. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. If two companies have the same ROE, then I would generally prefer the one with less debt.īut ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. A company that can achieve a high return on equity without debt could be considered a high quality business. Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it. Its ROE is quite low, even with the use of significant debt that's not a good result, in our opinion. It's worth noting the high use of debt by Open Text, leading to its debt to equity ratio of 1.05. Story continues Open Text's Debt And Its 9.9% ROE
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