Insiders Are Selling Oracle

Oct. 8.13 | About: Oracle Corporation (ORCL)

In this article, I will feature one tech stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Oracle Corporation (NYSE:ORCL) develops, manufactures, markets, hosts, and supports database and middleware software, applications software and hardware systems.

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Insider selling during the last 30 days

Here is a table of Oracle's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Current Ownership (shares+options) Decrease In Ownership
Thomas Kurian EVP Sept 27 400,000 32,327 shares + 1,550,000 options 20.2%
Dorian Daley SVP Sept 25 100,000 5,000 shares + 50,000 options 64.5%
Michael Boskin Director Sept 16 30,000 5,000 shares 85.7%
Hector Garcia-Molina Director Sept 16 2,500 5,000 shares + 35,000 options 5.9%
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There have been 532,500 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Oracle's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
September 2013 1,032,500 0
August 2013 32,500 0
July 2013 2,962,500 0
June 2013 552,500 0
May 2013 2,909 0
April 2013 52,917 0
March 2013 527,917 0
February 2013 2,917 0
January 2013 42,917 0
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There have been 5,209,577 shares sold and there have been zero shares purchased by insiders this year.

Financials

Oracle reported the fiscal 2014 first-quarter, which ended August 31, financial results on September 18, with the following highlights:

Revenue $8.4 billion
Net income $2.2 billion
Cash $39.1 billion
Debt $24.1 billion
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Outlook

Oracle's guidance for the fiscal 2014 second quarter is as follows:

  • New software license and cloud subscription revenue growth is expected to range from negative 4 to positive 6 in constant currency and negative 6 to positive 4 in reported dollars. Hardware product revenue is expected to range from negative 9% to positive 1% in constant dollars and negative 11% to negative 1% in reported dollars. As a result, total revenue growth on both GAAP and non-GAAP basis is expected to range from 1% to 4% in constant dollars and negative 1 to positive 2 in U.S. dollars.
  • Non-GAAP EPS is expected to be somewhere between $0.65 and $0.70 in constant dollars, $0.64 to $0.69 in reported dollars. GAAP EPS is expected to be $0.51 to $0.56 in constant dollars, and $0.50 to $0.55 in reported dollars.

Competition

Oracle's enterprise software and hardware offerings compete directly with some offerings from some of the largest and most competitive companies in the world, including Microsoft (NASDAQ:MSFT), International Business Machines (NYSE:IBM), Intel (NASDAQ:INTC), Hewlett-Packard (NYSE:HPQ) and SAP AG (NYSE:SAP) and smaller companies like salesforce.com (NYSE:CRM), as well as many others.

Here is a table comparing these companies.

Company CRM MSFT ORCL SAP IBM
Market Cap: 31.49B 277.39B 151.35B 87.58B 199.38B
Employees: 9,800 99,000 120,000 64,937 434,246
Qtrly Rev Growth (yoy): 0.31 0.10 0.02 0.04 -0.03
Revenue: 3.47B 77.85B 37.37B 21.54B 102.38B
Gross Margin: 0.77 0.74 0.81 0.72 0.49
EBITDA: 72.43M 30.10B 16.26B 7.38B 26.23B
Operating Margin: -0.05 0.34 0.39 0.29 0.21
Net Income: -232.26M 21.86B 11.08B 3.84B 15.91B
EPS: -0.41 2.58 2.33 3.21 14.09
P/E: N/A 12.91 14.27 22.88 12.92
PEG (5 yr expected): 5.60 1.41 1.09 1.33 1.10
P/S: 9.07 3.56 4.05 4.07 1.95
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Oracle has the second-lowest quarterly revenue growth among these five companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
MSFT 0 60,339,723
IBM 1,000 231,553
INTC 0 2,316,214
HPQ 0 49,000
CRM 0 1,204,821
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Salesforce.com has also seen intensive insider selling during the past 30 days.

Conclusion

There have been four different insiders selling Oracle and there have not been any insiders buying Oracle during the past 30 days. Three of these four insiders decreased their holdings by more than 10%. Oracle has an insider ownership of 23.68%.

Oracle is trading at a P/E ratio of 14.27 and a forward P/E ratio of 10.52. The company has a book value of $9.45 per share and the stock has a dividend yield of 1.45%.

Oracle has a $24 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $24 price target. I would place a stop loss at $35, which is the six-month high. The two main reasons for the proposed short entry are bearish Point and Figure chart and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in ORCL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.