Upcoming Earnings: Oracle Reports After The Bell On Tuesday

Oracle Corporation ORCL reports fiscal fourth-quarter earnings after market close on Tuesday, June 19.

The last time the company reported, EPS came in above estimates, $0.83 versus estimates for $0.72, while revenue was just below what analysts were expecting, $9.77 billion versus estimates for $9.78 billion.

At the same time, analysts were disappointed in the 32 percent year-over-year growth in total cloud revenue, which had slowed from 44 percent growth in fiscal Q2. Management’s fiscal Q4 cloud revenue guidance for 19 percent to 23 percent growth was also below analyst expectations. Following the report, ORCL dropped 9.4 percent.

ORCL’s management has regularly touted the company’s cloud business growth, and have been confident that it’ll remain a strong growth driver in the future. Some analysts said the cloud growth slowdown in fiscal Q3 indicated management’s transition from legacy products to cloud-based services is taking longer than they expected.

Despite the slowdown in ORCL’s cloud revenue growth in fiscal Q3, the company’s legacy business hasn’t declined as fast as many analysts have been projecting. Total on-premise software revenues grew 4 percent year over year to $6.4 billion. Hardware revenues and services revenues, two of ORCL’s smallest divisions, declined 3 percent and 2 percent year over year, respectively, to $994 million and $796 million.

For fiscal Q4, ORCL is expected to report adjusted EPS of $0.94 on $11.19 billion in revenue, according to third-party consensus analyst estimates. In the same period last year, the company reported adjusted EPS of $0.89 on revenue of $10.94 billion. 

Oracle One YearStock Chart. After ORCL’s last report in mid-March, the stock dropped byalmost 10 percent and subsequently hit a new 52-week low of $44.04. The stock hadrecovered back to the upper-$40 range, but it dropped last week after J.P.Morgan analysts downgraded the stock, citing heightened competition. Chartsource: thinkorswim^® fromTD Ameritrade.  Not a recommendation. For illustrativepurposes only. Past performance does not guarantee future results.

Oracle Options Trading Activity

On Friday, the stock closed $2.24 above the 52-week low of $44.04 it hit in early April after its last earnings report. It had recovered a bit from that 52-week low, but a downgrade by J.P. Morgan analysts last week sent the stock from $48.27 to $45.90 on June 14.

Around the upcoming earnings release, options traders have priced in about a 4.7 percent potential stock move in either direction, according to the Market Maker Move indicator on the thinkorswim®platform. Implied volatility was at the 61st percentile as of this morning.

In short-term options trading at the June 22 weekly expiration, calls have been active at the 47 and 47.5 strike prices, while puts have been active at the 46 strike.

Looking at the July 20 monthly expiration, recent trading on the call side has been concentrated at the 47 strike price. On the put side, trading has been concentrated at the 45 and 46 strikes.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.

Looking Ahead

In addition to ORCL, there are several other notable companies reporting earnings this week. FedEx (FDX) reports quarterly resultsTuesday, Micron Technology, Inc. MU reports on Wednesday and Kroger (KR) reports on Thursday.

There’s also a slew of housing data scheduled for release this week, with housing starts and building permits on Tuesday morning, existing home sales Wednesday morning, and the FHFA housing price index on Thursday morning. For a look at what else is going on, check out today’s market update if you have time.  

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.