Oracle Corporation (NASDAQ: ORCL) is the world's largest enterprise software company, providing database, infrastructure, and computer application software for managing business data and supporting business operations. Essentially, the programs facilitate functions in data storage/access, analytics, customer relationship management, supply chain management and software development. The firm provides a wide variety of consulting, training and license updating services. Products are sold through internet service providers, network integrators, resellers and independent software vendors.
Oracle pleased investors last week, when it reported Q2 EPS of 31 cents and revenues of $5.36 billion. Analysts had
been expecting 27 cents and $5.04 billion. Database and middleware new license revenues were up 28% and applications new license revenues grew 63%. Management also guided Q3 EPS to 29-30 cents (29 cents consensus) and Q3 revenues to about $5.338 billion ($5.19B consensus). ORCL shares popped on the news and then moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with eight "strong buys," eighteen "buys" and seven "holds." Analysts see a 15% average annual growth rate, through the next five years. The ORCL Price to Free Cash Flow ratio (17.93), Sales Growth rate (27.23%), EPS Growth rate (55.00%), Operating Margin (33.23%), Net Profit Margin (23.80%) and Return on Assets (14.80%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 56 percent of the outstanding shares. The stock is one of those used to calculate the S&P 100 Index, the S&P 500 Index and the Nasdaq 100 Index. Over the past twelve months, it has traded between $15.97 and $23.00. A stop-loss of $20 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
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