What To Look For From Oracle's Earnings Report

Jun.18.14 | About: Oracle Corporation (ORCL)

Summary

The fourth fiscal quarter is normally the strongest of the year for Oracle, and Wall Street has set the bar high this period.

The Street is expecting Oracle to increase its FQ4 EPS by 8 cents per share compared to last year while revenue grows by 5% on a year-over-year basis.

Earnings in-line with the Wall Street consensus will probably be enough to keep shareholders happy.

Oracle Corporation (NYSE:ORCL) is set to report FQ4 2014 earnings after the market closes on Thursday, June 19th. Oracle is a technology company known for selling enterprise software, cloud services and computer hardware systems. The fourth fiscal quarter is normally the strongest of the year for Oracle, and Wall Street has set the bar high this period. The Street is expecting Oracle to increase its FQ4 EPS by 8 cents per share compared to last year while revenue grows by 5% on a year-over-year basis. In other news, Oracle is rumored to be getting close to announcing an acquisition of Micros Systems, a maker of software and point-of-sale devices for restaurants, hotels and retailers in a deal valued over $5 billion. Although Wall Street has considerable quarterly growth expectations, investors are signaling they may be willing to give Oracle a pass this quarter for missing the high target as long as they can come close.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

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(Click Here to see Estimates and Interactive Features for Oracle)

The current Wall Street consensus expectation is for Oracle to report 95 cents EPS and $11.469B revenue while the current Estimize.com consensus from 41 Buy Side and Independent contributing analysts is 94 cents EPS and $11.449B in revenue. This quarter the buy side as represented by the Estimize.com community is expecting Oracle to miss the Wall Street consensus by a thin margin.

By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.

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. Here we are seeing a smaller than usual differential between the two groups' expectations.

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The distribution of earnings estimates published by analysts on the Estimize.com platform range from 88 cents to $1.00 per share and from $11.234B to $11.800B in revenues. This quarter we're seeing a wider range of estimates on Oracle's earnings.

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 wide range of estimates signals less agreement in the market, which could mean greater volatility post earnings.

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Over the past three months the Wall Street consensus has remained flat at 95 cents while the Estimize consensus dipped before inching higher from 93 cents to 94 cents. Meanwhile the Wall Street revenue forecast shot up right before the report from a low of $11.460B to $11.469B while the Estimize sales consensus fell before increasing from $11.440B to $11.449B. Timeliness is correlated with accuracy and upward analyst revisions at the end of the period are often a bullish indicator.

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The analyst with the highest estimate confidence rating this quarter is TechStockRadar who projects 95 cents EPS and $11.470B in revenue. TechStockRadar self identifies as an independent financial research professional and is ranked 13th overall among over 4,500 contributing analysts. Over the past two years TechStockRadar has been more accurate than Wall Street in forecasting EPS and revenue an impressive 66% and 64% of the time respectively throughout 552 estimates.

Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case TechStockRadar is expecting Oracle beat the Estimize consensus and report right in-line with the Wall Street consensus.

Oracle has been reeling to compete with several smaller competitors in cloud-based data analytic software and HR programs while simultaneously trying to turn around its hardware business, which showed more revenue growth than expected last quarter. At the same time Oracle may be eyeing a move into point-of-sale hardware and looking to expand its enterprise solutions through a high profile acquisition of Micros Systems. Contributing analysts on the Estimize.com platform are signaling that on Thursday Oracle doesn't need a blow-out quarter to keep them satisfied. Earnings in-line with the Wall Street consensus will probably be enough to keep shareholders happy.

Disclosure: None.