Open Text Corporation (NASDAQ:OTEX), a software and services company based in Canada, received a lot of attention from a substantial price movement on the NasdaqGS in the over the last few months, increasing to $34.49 at one point, and dropping to the lows of $31.02. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether OTEX's current trading price of $31.66 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at OTEX’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for OTEX

What's the opportunity in OTEX?

Great news for investors – OTEX is still trading at a fairly cheap price. My valuation model shows that the stock’s value should be $43.87 but it is currently trading at $31.66 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that OTEX’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of OTEX look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at OTEX future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for OTEX, at least in the near future.

What this means for you:

Are you a shareholder? Although OTEX is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to OTEX, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on OTEX for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Open Text. You can find everything you need to know about OTEX in the latest infographic research report. If you are no longer interested in Open Text, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.