Market Overview

Oracle Earnings Preview: EPS Growth and Flat Revenue Expected

Oracle (NASDAQ: ORCL), which just announced a deal to acquire SelectMinds, is scheduled to report its first-quarter fiscal 2013 results Thursday, September 20 after market close. Investors will be looking to see whether the engineered systems hardware and Oracle Cloud businesses, as well as the company's growth through acquisition strategy, continued to drive growth in the three months that ended in August.

See also: Oracle Buys SelectMinds, Terms Undisclosed

Expectations

Analysts on average predict that Oracle will report per-share earnings of $0.53 for the quarter, as well as more than $8.4 billion in revenue. In the same period of last year, the company reported a profit of $0.48 per share and $8.4 billion in revenue. The consensus earnings per share (EPS) estimate has not changed in the past 60 days. Oracle has only fallen short of analysts' expectations in one of the past 10 quarters. The upside surprise in the fourth quarter was more than five percent.

The company attributed record fourth-quarter results to, among other things, a surge in new software license revenue. The board approved an additional $10 billion stock repurchase authorization. Oracle's share price rose about five percent in the two days following the report.

Looking ahead to the current quarter, the consensus forecast calls for sequential and year-over-year growth of both EPS and revenue. And so far, analysts expect full-year per-share earnings growth of about 7.5 percent, as well as for revenue to be about 4.7 percent higher than in the previous year.

The Company

Oracle Corporation develops, manufactures, hosts and supports database and middleware software, applications software and hardware systems. It is an S&P 500 component headquartered in Redwood City, California, and it has with a market capitalization of more than $161 billion. It was founded in 1977, and co-founder Larry Ellison remains the CEO.

Competitors include SAP (NYSE: SAP), IBM (NYSE: IBM) and Microsoft (NASDAQ: MSFT). Back in July, SAP posted its best-ever second-quarter results and IBM reported better-than-expected earnings despite soft revenue, but Microsoft posted its first-ever quarterly net loss.

During the three months that ended in August, Oracle continued to roll out new products and services and announced its new cloud computing strategy. It settled a bribery suit with the SEC, won a copyright infringement suit against SAP, and lost a suit against Hewlett-Packard (NYSE: HPQ). Oracle announced deals to acquire Collective Intellect, Involver, Skire and Xsigo Systems. And Larry Ellison bought a Hawaiian island.

See also: Oracle Continues Buying Spree, Purchases Xsigo

Performance

Oracle's long-term EPS growth forecast is more than 11 percent. Its operating margin is higher than the industry average, and the return on equity is nearly 24 percent. It has a dividend yield of less than one percent. Short interest is about one percent of the float. Of 43 analysts surveyed by Thomson/First Call who follow the stock, 31 rate the shares at Buy or Strong Buy. But their mean price target, a sign of where they expect the share price to go, is a little over three percent higher than the current share price

The stock has risen about 22 percent in the past 90 days. The share price is now above the 50-day and 200-day moving averages. Over the past six months, the stock has outperformed SAP, IBM and Microsoft, as well as the broader markets.

Posted-In: Collective Intellect Involver Larry Ellison Skire Xsigo SystemsEarnings Long Ideas News Short Ideas Previews Management Trading Ideas Best of Benzinga

 

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