ORCL  Oracle Corporation

Exchange

NASDAQ

Sector

Technology

Industry

Computer Software: Prepackaged Software

Market Cap.

185.00B

Vuru Grade

72.50/100

Current Price

$44.96
+0.19 (+0.42%)

Growth Price

$41.59
Overvalued by 7.49%

Stability Price

$16.42
Overvalued by 63.48%

Company Metrics

  • P/E 21.27
  • P/S 4.92
  • P/B 3.64
  • EPS 2.11
  • Cash ROIC 35.88%
  • Cash Ratio 3.26
  • Dividend 0.64 / 1.43%
  • Avg. Vol. 13.04M
  • Shares 4.11B
  • Market Cap. 185.00B

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

Are Oracle's Dividends Worth It?
Seeking Alpha - Apr 28, 2017
The dividend streams are even overvalued if the company increases the payout ratio to 55% and maintains a 21% growth rate. Introduction.
Oracle Corporation (NYSE:ORCL) To Make Moat Investors Filthy Rich
Journal Transcript - Apr 26, 2017
Oracle Corporation (NYSE:ORCL) is poised to make various investors filthy rich as it closes in on a deal for tech startup Moat.
Oracle Corporation Posted losses of -0.27% in the Last Trade - Free Observer
Investors are upbeat on the prospect of these stock's: Oracle Corporation ... - StockNewsJournal
Oracle To Acquire Moat For Digital Marketing Measurement
Seeking Alpha - Apr 19, 2017
Database technology company Oracle (NYSE:ORCL) has agreed to acquire digital measurement cloud company Moat for an undisclosed amount.
Oracle Buys Moat - Newswire Today (press release)
Oracle to Acquire Digital Measurement Firm Moat - Fox Business
Pete Najarian Sees Unusual Options Activity In Oracle
Benzinga - Apr 28, 2017
Pete Najarian said on CNBC's Fast Money Halftime Report that he noticed unusually high bullish options volume in Oracle Corporation (NYSE: ORCL). He explained that somebody bought 8,500 contracts of the July 48/50 call spread for $0.22 in the first ...
Oracle Corporation (NYSE:ORCL) Purchases Dutch Code Testing And Deployment Startup
Journal Transcript - Apr 19, 2017
However Oracle is said to be on a company-buying spree, as it has recently purchased quite a number of companies in the past few months.
Oracle Corporation Posted gains of 0.92% in the Last Trade - Free Observer
Current Market Buzz: Applied Materials, Inc. (AMAT), Oracle Corporation (ORCL) - TopChronicle
Oracle: Fly Safely
Seeking Alpha - Apr 12, 2017
Oracle was the first stock that came up in bearish mode on the Wing Charts technical analysis screener on Tuesday, so we looked at a few other gauges of sentiment.
Oracle Corporation (ORCL) Ex-Dividend Date Scheduled for April 10, 2017
Nasdaq - Apr 7, 2017
Oracle Corporation ( ORCL ) will begin trading ex-dividend on April 10, 2017. A cash dividend payment of $0.19 per share is scheduled to be paid on April 26, 2017.
Oracle Corporation subtracted -0.7% in its Stock Price in the Previous Trading ... - Free Observer
Today's Analyst Moves: MGM Resorts International (MGM), Oracle Corporation (ORCL) - USA Commerce Daily
Oracle Corporation (ORCL) Stock: Don't Call It a Comeback. It's Really Not
Investorplace.com - Mar 31, 2017
After years of underperformance, Oracle Corporation (NYSE:ORCL) stock finally seems to have turned the corner. Oracle stock has racked up gains of 16.8% in the year-to-date, thanks to a terrific 7% jump after the company delivered better-than-expected ...
Oracle Corporation (NYSE:ORCL): Light on the Other Side of the Cloud - Library For Smart Investors
Oracle Corporation (NYSE:ORCL)'s Retail Solutions Will Help In Driving ...
Journal Transcript - Apr 13, 2017
Italian fashion company Miroglio Fashion will be using a host of solutions from Oracle Corporation (NYSE:ORCL) in its launch of a retail innovation initiative.
Oracle Corporation (NYSE:ORCL) Retail Is the Choice Of Miroglio In Its New ... - WallStreetPR
Oracle's Irish arm pays just €3.8m in corporation tax on €8bn profits
Irish Times - Apr 26, 2017
The company's tax liability was €32.6 million as against €39 million a year earlier. Of this, €3.8 million was made up of Irish corporation tax. During the reporting period, Oracle EMEA Limited announced 450 additional sales jobs in Dublin as part of a ...
Oracle's Irish unit in the red on higher costs - Irish Examiner
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.

$44.96 Current Price

$41.59 Growth Price (DCF)

Overvalued by 7.49%


Growth Rate Assumed by Market: 13.61%


Future Free Cash Flow Growth Rate: 11.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$16.42 Stability Price (EPV)

Overvalued by 63.48%


Discount Rate: 15.0%

$46.90 Book Price

Fairly valued


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
Sort By:
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