Prominent Hedge Fund Analyst Makes Bearish Call On Oracle's Earnings Report

 |  About: Oracle Corporation (ORCL)
by: Leigh Drogen

Oracle (NYSE:ORCL) is expected to report FQ1 2014 earnings on September 18th after the close. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.

The current Wall Street consensus expectation is for ORCL to report 56c EPS and $8.475B Revenue while the current Estimize consensus from 14 Buy Side and Independent contributing analysts is 56c EPS and $8.448B Revenue. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market.

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Over the past 4 months the Wall Street consensus trend for EPS has been negative, moving from 58c to 56c while the the Wall Street consensus trend for Revenue has been negative moving from $8.660B to $8.475B. There have not been any recent revisions from Wall Street, but the Estimize revenue consensus has dipped significantly towards the end of the quarter. The directionality of revisions at the end of the quarter is often a good predictor of beats and misses.

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Over the previous 8 quarters, ORCL has beaten the Wall Street consensus for EPS 4 times while missing the Wall Street Revenue consensus 4 times. Over the same time period ORCL has missed the Estimize consensus for EPS 5 times while missing the Estimize Revenue consensus 3 times. Disappointing reports the last two quarters have significantly impacted ORCL post earnings as the stock has seen significant selling each time.

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The distribution of estimates published by analysts on Estimize range from 62c to 54c EPS and $8.150B to $8.750B Revenues. The range of estimates for both EPS and Revenue this quarter is larger than it has been during the past two earnings releases signaling that there is wide disagreement amongst analysts. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.

The analyst with the highest estimate confidence rating this quarter is hedge fund analyst JC215 who projects 56c EPS and $8.425B Revenue.

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Given ORCL’s recent history of disappointing earnings results, the trend in the Estimize Revenue Consensus, and a bearish estimate by one of the most accurate hedge fund analysts on the platform, ORCL may be in for a tough report. As well, given the size of the distribution the stock should see significant volatility post earnings.

View all of the estimates for ORCL published by your Buy Side and Independent analyst peers, and register to publish your own, here.