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  5. GIB.A: Could you please compare the key financial metrics of OTEX vs ENGH and tell me which one you feel is the better long term hold and why. [CGI Inc. Class A Subordinate Voting Shares]
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Q: Could you please compare the key financial metrics of OTEX vs ENGH and tell me which one you feel is the better long term hold and why. Finally, is there a canadian tech company you prefer to either of these 2?

Many Thanks
Scott
Asked by Scott on July 17, 2024
5i Research Answer:

 OTEX is trading at 8.8x Forward P/E, gross margin is around 77%, and EBIT margin is approximately 24%. Growth over the next three years is expected to be around 3%-5% organically. OTEX has a net debt/EBITDA of 4.6x as the company recently did a large acquisition.

ENGH is trading at 21.6x, its gross margin is 66%, its EBIT margin is 19%, and ENGH has net $253M cash on the balance sheet. ENGH’s growth is expected to be around 10% over the next few years.

Both are decent businesses, but among Canadian tech names, we like CSU’s entities most (CSU, LMN, TOI). Other names that currently also look better are GIB.A and DSG.

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