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Oracle (ORCL) stock and its accretion potential

Carla Olson | 11:05 am ET, 16 Sep 2018

Oracle Corporation (ORCL) shares are trading at $49.30.  The company is releasing its Q1'19 results after the market close on September 17, 2018. What's driving ORCL stock price? What's ORCL stock price forecast?

The Oracle stock lost has been struggling to gain in value this year. But there is some good news: the stock has been on an upward trend after the last quarterly results.  Its autonomous database offering is perceived as the market leading category, and its ERP Cloud business is gaining a lot of appeal from CFOs.

Revenue grew 3% in the last quarter to $11.3 billion.  For the full fiscal year 2018, revenue grew 6% to $39.8 billion. Bulls see an amazing potential for Oracle as the leader in modern finance. Bears view Oracle's forcible sales tactics and the questionable value of support as the major hindrances for the company in establishing a larger presence in the cloud market.

The company will release its next quarterly results after market close on September 17, 2018.  The median analyst revenue estimate is $9.29 billion; earnings per share estimate is $0.69.

What is the sentiment towards the ORCL stock? Our technical analysis shows that:

  • The stock short-term sentiment (next 30 days) is trending negative;
  • The mid-term sentiment (3-6 months) is trending positive;
  • The long-term sentiment (9-12 months) is trending positive.

Oracle Corporation (ORCL) forward P/E ratio is 13.37, and it’s low compared to its industry peers’ P/E ratios.  The average analyst price target ($53.27) is 10.82% above its current price ($48.07).

For the latest price and information on Oracle Corporation, please visit Finstead and search for "ORCL price" or "ORCL news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Salesforce.com (CRM): Is Acquiring MuleSoft (MULE) A Dumb Move?

Carla Olson | 2:37 pm ET, 21 Mar 2018

The acquisition of MuleSoft (MULE) by Salesforce (CRM) for around $6.5 billion is the largest in Salesforce’s  history. 

This may be expensive, but it’s strategic.  It enables CRM to compete with its chief rivals such as Microsoft Corporation (MSFT) and Oracle Corporation (ORCL).

How so? With its integration capabilities, Mule Soft can help Salesforce migrate competitor workloads to the Salesforce platform.  A particular target for this effort is Oracle.  While Oracle might have neglected its Marketing Cloud acquisitions, Salesforce is ready to take that business away from it.  

Mule Soft has manifested rapid growth through a 58% year-over-year surge in its revenue in 2017. The integration software maker has renowned brands as its customers (e.g., Coca-Cola, Mc Donald’s and Barclays).

Salesforce’s revenue will increase immediately after the acquisition, but not materially. But this aggressive step will help CRM achieve the $20B target by 2022.

How should you react as a Salesforce investor?  The acquisition should not fundamentally change your thinking.  Although expensive, it also has a lucrative upside. 

According to Finstead research, CRM’s average price target is comparable to its current price (visit Finstead.com and type "CRM price target").

Salesforce's long-term growth potential is evident from its constant effort in business expansion through strategic acquisitions and investments.

Over the last year, CRM returned +50.93%. This return is higher than Application Software sector (31.82%), Technology industry (22.52%), and S&P 500 (14.47%) returns.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Oracle (ORCL): What Is The Stock Forecast?

Carla Olson | 1:42 pm ET, 19 Mar 2018

Oracle strikes our attention as a stock that’s poised to beat the analyst estimate this earnings season.  The company is releasing its earnings this week, and investors are excited about the prospect of cloud growth at Oracle.  

Based on Finstead research, ORCL price target upside is 6.28%.

The reason why we’re seeing an excitement in the investment community is, Oracle is indicating favorable earnings as of lately, which is generally a precursor to an earnings beat. The analysts are raising estimates right before earnings, which is a pretty good indicator of some favorable trends going on for Oracle.

So the question is, how high can the stock go?  Based on Finstead, the average price target is $55.55. 

The optimists are saying that the price should be in the $60s.  


And Oracle valuation ratios seem pretty low.  Only IBM and HPE are valued below Oracle, based on forward P/E ratio. 

What are your thoughts on upcoming Oracle earnings?

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Oracle: How You Should Value The Stock

Carla Olson | 2:16 pm ET, 14 Dec 2017

Oracle (NYSE: ORCL) is reporting FY18 second-quarter earnings after the closing bell today.  You may be wondering, how will the stock move post-earnings.

The Finstead research team came up with a conclusion that the performance of Oracle Cloud constitutes more than 50% of Oracle's stock price movement.  

So first, look for Oracle Cloud results, and in particular Software-as-a-Service (SaaS), along with Platform-as-a-Service (PaaS) growth rates. 

On-Premise Software constitutes between 20-30% of the Oracle's stock's performance.  

The consensus among analysts is that Oracle will exceed its overall revenue and EPS targets.  The remaining question is, how fast will PaaS and SaaS bookings and revenue increase year-over-year.   

Oracle's share in the Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) market has increased from 1% in 2012 to 4.5% in 2016. This is primarily because of Oracle's rapid expansion in the cloud market by leveraging its massive existing customer base in the on-premise software market, but also because of acquisitions such as NetSuite.  

However, the Company uses aggressive sales methods to sell cloud over and above on-premise software licensing agreements.  Oracle has been willing to allow its SaaS and PaaS sales to cannibalize upon its legacy on-premise products, adding to the rapid growth of the former. 

The Company's sales teams have been reorganized to focus on SaaS and PaaS selling.  The most recent sales innovation is Universal Cloud Credits so that customers do not need to specify which Oracle cloud products they are going to use.   

To support the rapid expansion in cloud computing, Oracle made significant capital expenditures in setting up data centers between 2012 and 2014. The Company is now benefiting from the investments made so far.  

To ignite the cloud growth further and compete against SAP (NYSE: SAP), Oracle plans acquired NetSuite in 2016, which is a leader in cloud ERP market.

Over the last year, ORCL returned +23.14%. This return is higher than S&P 500 (17.22%), but lower than Technology sector (26.09%) and Application Software industry (24.73%) returns.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Oracle Corporation (ORCL) Buy or Sell Stock Guide

Updated at: 10:39 am ET, 12 May 2019

Are you looking for the analysis of Oracle Corporation (ORCL) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 7 reasons to buy and 12 reasons to sell ORCL stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about ORCL stock:

  • Is ORCL a buy or a sell?
  • Should I sell or hold ORCL stock today?
  • Is ORCL a good buy / investment?
  • What are ORCL analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy ORCL stock:

1. Despite a late start, Oracle has made the necessary investments to ensure its application software will thrive in a cloud-based environment, which should lock customers in over the long run.

2. Oracle has made a bevy of savvy acquisitions to expand its vertical-specific software portfolio, applications that we believe boast meaningful switching costs.

3. Oracle has become more flexible in recent years to meet customer needs, including the embrace of less expensive, open-source database solutions and other technologies.

4. Oracle is gaining ground in its cloud business as is evident from its performance, wherein total cloud revenues grew 60% over the prior-year period. Both its software-as-a-service (SaaS) and platform-as-a-service (PaaS) products should grow very strongly over the next few years as enterprises increasingly transition to the cloud.

5. Oracle enjoys a dominant position in the enterprise software and database management system (DBMS) software market. Among infrastructure, DBMS is expected to record strong growth driven by Big Data and digitalization initiatives. We believe that Oracle’s leading position in the DBMS software market will make it the primary beneficiary of this increased spending.

6. Oracle’s strong cash balance enables it to pursue share repurchases and make consistent dividend payments.

7. ORCL forward dividend yield is 1.79%, higher than the industry (0.14%) and sector (0.23%) forward dividend yields. See ORCL forward dividend chart.

Now that you understand the bull case, let’s look at the reasons to sell ORCL stock (i.e., the bear case):

1. It will be difficult for Oracle to halt the decay of its legacy relational database business as lower-cost, highly effective alternatives flood the market.

2. Oracle's push into public compute and storage could create a drag on cloud margins, and the firm is years behind top players Amazon and Microsoft in terms of capacity and breadth and dept of services.

3. Salesforce.com and Workday are investing heavily in building full-featured software platforms spanning multiple use cases to combat Oracle’s.

4. Although Oracle’s growing cloud business is a significant positive, we believe that the business model transition will hurt revenue growth over the next couple of years. The company expects to gain a significant part of its revenues from SaaS compared with legacy on-premise licensing business. However, SaaS revenues will not be recognized upfront as in the case of license business, which will hurt top-line growth in the near term.

5. While the acquisition of Sun Microsystems makes Oracle one of the leading players in the hardware market, we remain concerned about its growth opportunity. We believe that the ongoing transition to cloud will make it difficult for the hardware segment to perform well on a standalone basis. Although engineered systems are expected to drive growth, we believe that lower hardware volumes will continue to hurt top-line growth over the next couple of years.

6. Acquisitions have played an important part in Oracle’s growth trajectory over the years. Being a late entrant in the cloud computing space, the company is trying to build its position through aggressive acquisitions. The company is making significant investment in these acquisitions in order to catch up with Salesforce and IBM.

7. Oracle faces significant competition in most of its operational markets (database, applications, storage, cloud computing) from the likes of Dell-EMC, IBM, Hewlett-Packard, Microsoft, Sybase, SAP, Salesforce.com, Workday and Teradata. The trend toward consolidation is increasing competition for the company in most of these markets. To differentiate products here, large vendors are entering into alliances or partnerships to offer integrated and differentiating solutions.

8. Oracle has been embroiled in various legal tangles. In 2016, Oracle faced defeat in two of its most high profile lawsuits. In May 2016, a 10 member jury found no violations of JAVA APIs by Alphabet thus dismissing Oracle’s $9 billion claim.

9. ORCL stock price ($54.65) is close to the 52-week high ($55.41). Perhaps now is a good time to sell? See ORCL price chart.

10. ORCL quarterly revenue growth was -0.60%, lower than the industry and sector average revenue growth (7.17% and 5.21%, respectively). See ORCL revenue growth chart.

11. ORCL profitability is declining. The YoY profit margin change was -15.14percentage points. See ORCL profitability chart.

12. ORCL average analyst price target ($53.41) is below its current price ($54.65). See ORCL price target chart.

Now let's look at the key statistics for ORCL:

Metrics ORCL
Price $52.74
Average Price Target / Upside $53.41 / 1.27%
Average Analyst Rating Hold
Industry Software - Infrastructure
Sector Technology
Number of Employees 137,000
Market Cap $185.00B
Forward P/E Ratio 14.36
Price/Book Ratio 4.64
PEG 1.49
Revenue (TTM) $39.83B
YoY Quarterly Revenue Growth -0.6%
Profit Margin 27.26%

What are your thoughts on ORCL?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


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