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Oracle Earnings Preview: Safe, Older Tech Stock, But Not Without Cloud-Related Issues

Jun. 11, 2020 1:05 PM ETOracle Corporation (ORCL)MSFT21 Comments
Brian Gilmartin, CFA profile picture
Brian Gilmartin, CFA


  • Ultimately, as a software giant, Oracle needs faster revenue growth.
  • The non-legacy business tied to Saas, Paas and Iass, has struggled to get traction.
  • The legacy "stand-alone" dbase business has gradually eroded the last 5 - 7 years.
  • Oracle's relative performance versus the SP 500 has been pretty bad.
  • Oracle is fairly-valued on most metrics given low-single-digit rev growth.

Oracle (NYSE:ORCL) the database software giant that remains under pressure since the emergence of the cloud is both an opportunity to Oracle and a competitive threat, is scheduled to report their historically-strong fiscal Q4 earnings on Tuesday, June 16th, 2020, after the closing bell.

Street consensus per IBES by Refinitiv is expecting $1.19 in earnings per share (vs $1.16 in last year's fiscal Q4) and $10.87 billion in revenue for expected year-over-year growth of 3% in earnings on a 2% y/y decline in revenue.

The stronger dollar the last 18 months has not helped Oracle.

Expectations for fiscal 2021 as they stand today also by IBES by Refinitiv are for full-year EPS of $4.13 on $39.7 billion in revenue for expected year-over-year growth of 7% in earnings on 1% revenue growth.

Quarterly guidance for Oracle is always important but it isn't given the same level of importance as the how the annual numbers change. The May quarter every year is typically Oracle's strongest and this expected Q4 '20 - using consensus estimates - is 27% of full-year revenue and 30% of expected full-year EPS for the software giant.

Readers should watch how fiscal 2021 estimates change after the release and conference call.

Oracle's EPS and revenue estimate revisions:

Showing readers the expected EPS and revenue growth rates along with the corresponding PE's is a short-cut to save time:


Expected Oracle EPS growth rates

(Source: internal valuation spreadsheet)

PE ratio:

Oracle PE ratio for forward estimates

(Source: internal valuation spreadsheet)



(Source: internal valuation spreadsheet)

Readers can see for both Oracle EPS and revenue, the expected growth rates for 2020 have declined while the expected revenue growth has stayed fixed in the low-single digits.

The erosion began before the onset of Covid-19 and the shelter-in-place too.

Fiscal '21 EPS growth is looking stronger, while revenue is not. 1% expected revenue growth for 2021 is impressing

This article was written by

Brian Gilmartin, CFA profile picture
Brian Gilmartin, is a portfolio manager at Trinity Asset Management, a firm he founded in May, 1995, catering to individual investors and institutions that werent getting the attention and service deserved, from larger firms. Brian started in the business as a fixed-income / credit analyst, with a Chicago broker-dealer, and then worked at Stein Roe & Farnham in Chicago, from 1992 - 1995, before striking out on his own and managing equity and balanced accounts for clients. Brian has a BSBA (Finance) from Xavier University, Cincinnati, Ohio, (1982) and an MBA (Finance) from Loyola University, Chicago, January, 1985. The CFA was awarded in 1994. Brian has been fortunate enough to write for the TheStreet.com from 2000 to 2012, and then the WallStreet AllStars from August 2011, to Spring, 2012. Brian also wrote for Minyanville.com, and has been quoted in numerous publications including the Wall Street Journal.

Analyst’s Disclosure: I am/we are long ORCL. 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.

ORCL reports Tuesday 6/16 after the close

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