ORCL  Oracle Corporation

Exchange

NASDAQ

Sector

Technology

Industry

Computer Software: Prepackaged Software

Market Cap.

183.72B

Vuru Grade

72.50/100

Current Price

$44.65
-0.30 (-0.67%)

Growth Price

$41.59
Overvalued by 6.85%

Stability Price

$16.42
Overvalued by 63.22%

Company Metrics

  • P/E 21.12
  • P/S 4.94
  • P/B 3.65
  • EPS 2.11
  • Cash ROIC 35.88%
  • Cash Ratio 3.26
  • Dividend 0.64 / 1.43%
  • Avg. Vol. 13.22M
  • Shares 4.11B
  • Market Cap. 183.72B

Company Description

Oracle Corporation, an enterprise software company, develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide. It engages in licensing database and middleware software, including database, application server and application grid, SOA suite and business process management, data migration and integration, busine... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Oracle: Now Is The Time To Buy
Seeking Alpha - Mar 17, 2017
Oracle's total cloud business has reached the $5 billion mark; the company now sells more cloud apps than Salesforce.
Sharp Pullback for Oracle Corporation (NYSE:ORCL) Following Fiscal 3Q Results ... - Smаrt Stоck Nеws
Oracle Could Run Away with $50.8 Billion in Enterprise Spending - Market Realist
Market Challenge: Oracle Delivers
Seeking Alpha - Mar 16, 2017
Shares in Oracle (NYSE:ORCL) are on the rise today after the company reported decent fiscal third quarter results. The company missed on revenue estimates ($9.2 billion) but beat on EPS (69 cents, topping estimates by 7 cents). What impressed some was ...
Can Oracle Keep Up Its Cloud Revenue Growth In The Third Quarter? - Benzinga
Oracle Corporation (ORCL) Stock: The Cloud Is Right, But the Price Is Not - Investorplace.com
Oracle Earnings Preview: All About The Cloud
Seeking Alpha - Mar 6, 2017
SaaS and PaaS gross margins expanded by a whopping 18 percentage points YOY to 61% last quarter, and helped to finally stabilize total company op margins. Profitability in cloud (again, except for the much smaller IaaS business) seems to be heading in ...
Drilling Down Into Oracle Corporation (ORCL)
StockNewsJournal - Mar 24, 2017
Oracle Corporation (ORCL) is an interesting player in the Technology space, with a focus on Application Software. The stock has been active on the tape, currently trading at $44.95, up from yesterday's close by 0.36%.
Oracle Corporation performed Very Well with a change of 0.36% in the Last Trade - Free Observer
Price Forecast For Oracle Corporation (NYSE:ORCL) Stock At $48.157 - Transcript Daily
Oracle Makes New All-Time High
Benzinga - Mar 16, 2017
Oracle Corporation (NYSE: ORCL) shares are trading higher by $3.68 (8 percent) at $46.73 in Thursday's session. The catalyst for the rally is a Q4 EPS beat along with a $400 million beat for revenues.
Oracle Dominates ERP Market; Netsuite, Cloud Key Catalysts
Yahoo Finance - Mar 17, 2017
Oracle Corp's ORCL latest third-quarter fiscal 2017 results revealed the company's continuing domination in the cloud-based Enterprise Resource Planning (ERP) market.
Oracle Launches Retail Merchandising Solution Over the Cloud
Yahoo Finance - Mar 22, 2017
Oracle Corporation ORCL has recently announced the availability of its Oracle Retail Merchandising Solutions over its cloud platform - Oracle Cloud.
Oracle Corporation (ORCL) Moves Lower on Volume Spike for March 21 - Equities.com
Traders Secrets on Micron Technology, Inc. (MU), Oracle Corporation (ORCL) - StockNewsJournal
Thursday's Vital Data: Apple Inc. (AAPL), Oracle Corporation (ORCL) and Tesla ...
Investorplace.com - Mar 16, 2017
U.S. stock futures are in rally mode this morning, as Wall Street continues to cheer what some are calling a “dovish” interest rate hike from Federal Reserve.
Why Oracle Corporation (NASDAQ:ORCL) Could Acquire Salesforce.com, Inc (NYSE:CRM)
BNL Finance (press release) (registration) (blog) - Mar 18, 2017
With a market capitalization of near $60 billion, Salesforce.com (NYSE:CRM) might look too big to absorb for a company like Oracle Corporation (NYSE:ORCL). However, Oracle's $200 billion market capitalization and near $20 billion in cash & equivalents ...
What are Analyst's Indicators for Oracle Corporation (ORCL), Intel Corporation ... - The USA Commerce
Oracle Corp (ORCL): Wait Before Investing in This Hot Stock - Economic Calendar
Oracle Corporation (NYSE:ORCL) Heffx Technical Analysis
Live Trading News - Mar 17, 2017
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for ORCL to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate ORCL's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$44.65 Current Price

$41.59 Growth Price (DCF)

Overvalued by 6.85%


Growth Rate Assumed by Market: 13.38%


Future Free Cash Flow Growth Rate: 11.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$16.42 Stability Price (EPV)

Overvalued by 63.22%


Discount Rate: 15.0%

$46.93 Book Price

Undervalued by 5.10%


Excellent Cash Return on Invested Capital over the past 5 years

ORCL has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

ORCL has created $35.88 of cash for every $100 invested.
Figures in USD. Fiscal year ends in May
20122013201420152016
Free Cash Flow 13.10B 13.57B 14.34B 12.95B 12.37B
divided by
Invested Capital 32.26B 36.72B 37.14B 41.24B 38.85B
Cash ROIC 40.59% 36.96% 38.62% 31.39% 31.85%

Excellent Return on Equity over the past 5 years

Over the past 5 years, ORCL has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

ORCL has generated $21.99 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in May
20122013201420152016
Net Income 9.98B 10.93B 10.96B 9.94B 8.90B
divided by
Stockholders' Equity 43.69B 44.65B 46.88B 48.66B 47.29B
Return on Equity 22.85% 24.47% 23.37% 20.42% 18.82%

Excellent Business Performance over the past 10 years

ORCL has been able to maintain profitability in good times and bad. This could mean ORCL has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

ORCL has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Free Cash Flow 5.20B 7.16B 7.73B 8.45B 10.76B 13.10B 13.57B 14.34B 12.95B 12.37B

Weak Balance Sheet

ORCL's financial position is not ideal. The key is to check whether ORCL is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Cash 7.02B 11.04B 12.62B 18.47B 28.85B 30.68B 32.22B 38.82B 54.37B 56.13B
Current Assets 12.88B 18.10B 18.58B 27.00B 39.17B 40.02B 41.69B 48.14B 63.18B 64.31B
Total Assets 34.57B 47.27B 47.42B 61.58B 73.54B 78.33B 81.81B 90.34B 110.90B 112.18B
Current Liabilities 9.39B 10.03B 9.15B 14.69B 14.19B 15.39B 12.87B 14.39B 15.29B 17.21B
Total Liabilities 17.65B 24.24B 22.33B 30.78B 33.76B 34.64B 37.16B 43.47B 62.24B 64.89B
Stockholder' Equity 16.92B 23.03B 25.09B 30.80B 39.78B 43.69B 44.65B 46.88B 48.66B 47.29B
Current Ratio 1.37 1.81 2.03 1.84 2.76 2.60 3.24 3.35 4.13 3.74
TL-to-TA 0.51 0.51 0.47 0.50 0.46 0.44 0.45 0.48 0.56 0.58

Consistent Reinvestment of Profits over the past 10 years

ORCL has consistently retained profits. This may put ORCL in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, ORCL can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Retained Earnings 6.22B 9.96B 11.89B 16.15B 22.58B 26.09B 25.85B 25.97B 26.50B 23.89B
Retained Earnings Growth - 60.07% 19.41% 35.75% 39.86% 15.53% -0.89% 0.43% 2.07% -9.87%

Competitive Advantage over the past 10 years

ORCL likely has a competitive advantage which prevents other companies from entering or competing in their industry. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at future prospects to determine its sustainability.

$25.42 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Net Income 4.27B 5.52B 5.59B 6.14B 8.55B 9.98B 10.93B 10.96B 9.94B 8.90B
divided by
Revenue 18.00B 22.43B 23.25B 26.82B 35.62B 37.12B 37.18B 38.28B 38.23B 37.05B
Net Profit Margin 23.75% 24.61% 24.05% 22.87% 23.99% 26.89% 29.38% 28.62% 26.00% 24.03%

Strong Pricing Power over the past 10 years

ORCL has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$79.87 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Gross Profit 13.81B 17.45B 18.46B 21.06B 27.22B 32.60B 30.07B 31.04B 30.69B 29.57B
divided by
Revenue 18.00B 22.43B 23.25B 26.82B 35.62B 37.12B 37.18B 38.28B 38.23B 37.05B
Gross Margin 76.71% 77.79% 79.38% 78.51% 76.42% 87.82% 80.87% 81.09% 80.30% 79.81%

Low Capital Intensity over the past 10 years

ORCL has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that ORCL may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

7.54% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Capital Expenditure 319.00M 243.00M 529.00M 230.00M 450.00M 648.00M 650.00M 580.00M 1.39B 1.19B
divided by
Net Income 4.27B 5.52B 5.59B 6.14B 8.55B 9.98B 10.93B 10.96B 9.94B 8.90B
Capital Expenditure Ratio 7.46% 4.40% 9.46% 3.75% 5.27% 6.49% 5.95% 5.29% 14.00% 13.36%

Strong Dividend History over the past 10 years

ORCL has consistently distributed a dividend for the past 8 years. This suggests ORCL is established and will likely continue to distribute its dividend for the foreseeable future.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Dividend Paid - - 303.00M 1.00B 1.06B 1.37B 1.46B 2.21B 2.45B 2.54B
divided by
Shares Outstanding 5.27B 5.23B 5.13B 5.07B 5.13B 5.10B 4.84B 4.60B 4.50B 4.31B
Dividend Paid Per Share - - 0.06 0.20 0.21 0.27 0.30 0.48 0.54 0.59
Price at Year End 22.41 17.39 24.50 31.00 25.59 33.02 37.99 45.34 36.92 38.45
Dividend Yield - - 0.24% 0.64% 0.81% 0.81% 0.80% 1.06% 1.47% 1.54%

Strong History of Stock Buybacks over the past 10 years

ORCL has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in May
2007200820092010201120122013201420152016
Shares Outstanding 5.27B 5.23B 5.13B 5.07B 5.13B 5.10B 4.84B 4.60B 4.50B 4.31B
Stock Bought Back - 0.76% 1.93% 1.12% -1.07% 0.65% 5.18% 5.21% 2.24% 4.60%
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Discussion
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6
Posted by alexrasmussen  (on March 22, 2012)
I like that Larry is still on point and aggressive. Having a billionaire on board is always a huge plus in my books. In the right space, hopefully they'll be diligent on not overpaying for acquisitions. I'd rather own IBM but ORCL is a close second and better on valuation. http://seekingalpha.com/article/445411-identifying-8-predictable-cash-machines One of 8 cash machines I identified recently.
0
Posted by dougmccormick  (on March 22, 2012)
Having a founder running the company is the ideal but I wouldn't buy Oracle right now. Too close to intrinsic value. Maybe they'll miss their numbers and become a lot more itneresting
5
Posted by hound1965  (on July 20, 2012)
Be very careful of Vuru's analysis of ORCL. If you download the income statement you will find that the data for 2012 is incomplete and the calculations incorrect.
3
Posted by tmuscat27  (on October 18, 2012)
Can you be more specific and who are you comparing it with?
tx tm
3
Posted by pbanik  (on July 20, 2012)
@dougmccormick
Yes, ORCL is a company to wait for at a better price.
MSN Money's StockScouter rates ORCL highly as well:
http://investing.money.msn.com/investments/stock-price/?symbol=orcl
The yield is poor right now compared to the S&P500, the P/E ratio is higher than industry average, and so is price/sales ratio.I would give this stock maybe a 6 or 7 out of 10, but certainly a 9 or 10, or even an 8.
1
Posted by cbba@bolivien  (on May 5, 2013)
Hallo tmuscat27
Have a look at http://www.buffettsbooks.com/
start with course 1 lesson 1 on the end you know muuutch more
1
Posted by Alexleroi  (on December 18, 2012)
You certainly don't want to bet on a company that has bad incentives and undesirable employee relation.
1
Posted by tmuscat27  (on October 18, 2012)
Does anyone know why some companies like msft,mdt and others even though they have good earnings the price is still about the same as ten years ago.

And doese any one know how to calculate future share price. I use growth which should be the logical equation but many times my price differ from the analyst price.
Thanks t muscat
1
Posted by pbanik  (on October 19, 2012)
@tmuscat27

Price is determined by the action of buyers and sellers in the market, as it in other financial markets. If there are more shares being bought than sold, that will drive the price up. If there are more shares being sold than bought, that will drive the price down.

As for how to calculate future share price, here's some links that might be of help to you. I don't have any model I use at the present time. I just focus on the financials, management, competitors, economic moat (if present), dividends and buybacks policy.

How to Calculate Future Value of Stock
http://smallbusiness.chron.com/calculate-future-value-stock-3436.html

Stock Valuation — EPS Growth - PE Ratio Method
http://www.independent-stock-investing.com/PE-Ratio.html

Calculating Stock Prices
http://www.money-zine.com/Investing/Stocks/Calculating-Stock-Prices/

Predicting a Stock's Future Value
http://www.buckinvestor.com/basics/future_value.shtml

How to Predict Future Stock Prices
http://www.mktcrunch.com/2011/06/how-to-predict-future-stock-prices.html

The Nerbrand z
http://upload.wikimedia.org/math/e/7/1/e7124939370d19341ef639a6f4ff16d4.png

Nerbrand Z. Given that investments are subject to revisions of future expectations the Nerbrand Z utilises uncertainty of consensus estimates to assess how much earnings forecasts can be revised in standard deviation terms before P/E rations return to normalised levels. This calculation is best done with I/B/E/S consensus estimates. The market tend to focus on the 12 month forward P/E level but this ratio is dependent on earnings estimates which are never homogenous. Hence there is a standard deviation of 12 month forward earnings estimates.
The Nerbrand z is therefore expressed as

where H[P/E] = normalised P/E, e.g. a 5 year historical average of 12 month forward P/E ratios.
E12 = mean 12 month forward earnings estimates
stdev(E12) = standard deviation of 12 month forward earnings estimates.
A negative number indicates that earnings can be downgraded before valuations normalise. As such, a negative number indicate a valuation adjusted earnings buffer. For example, if the 12 month forward mean EPS forecast is $10, the price of the equity is $100, the historical average P/E ratio is 15, the standard deviation of EPS forecast is 2 then the Nerbrand Z is -1.67. That is, 12 month forward consensus earnings estimates could be downgraded by 1.67 standard deviation before P/E ratio would go back to 15.
http://en.wikipedia.org/wiki/Stock_valuation
http://en.wikipedia.org/wiki/The_Nerbrand_z

Stock Price Calculator for Common Stock Valuation
http://www.free-online-calculator-use.com/stock-price-calculator.html