Oracle’s Stock To Weaken Due To Mixed FY 2021 Results?

June 9th, 2021 by Trefis Team
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Oracle (NYSE: ORCL) is scheduled to report its fiscal Q4 2021 (ended May 2021) results on Tuesday, June 15. We expect ORCL to beat the consensus estimates for revenues but miss for earnings. The company has reported better than expected revenue and earnings figures in each of the last four quarters. During the Covid-19 pandemic ORCL’s revenue growth slowed and was 2% for the first nine months. Our forecast indicates that Oracle’s valuation is $72 per share, which is 14% below the current market price of $84. Look at our interactive dashboard analysis on Oracle’s pre-earnings: What To Expect in Q1? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q1

Trefis estimates ORCL’s fiscal Q4 2021 (ended May 2021) revenues to be around $10.9 billion, above the $10.1 billion consensus estimate. For the first nine months Oracle’s revenue was $29.3 billion, up 2% y-o-y. Overall, we expect revenue of around $40.2 billion in FY2021 (ended May 2021). Our dashboard on Oracle’s revenues offers more details on the company’s segments.

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(2) EPS likely to miss consensus estimates

ORCL’s Q4 2021 earnings per share (EPS) is expected to be $0.79 per Trefis analysis, below the consensus estimate of $1.11. The company’s net income margin is expected to rise to 31.4% primarily due to a one-time net tax benefit totaling $2.3 billion related to the transfer of certain assets between subsidiaries in Q3 2021 (ended February 2021). Altogether, the company is likely to report an EPS of around $4.07 in FY2021.

(3) Stock price estimate 14% below the current market price

Going by our Oracle’s valuation, with an EPS estimate of $4.58 for FY 2022 (ending May 2022) and a P/E multiple of around 15.8x in fiscal 2021, translates into a price of $72, which is 14% below the current market price of $84.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

While Oracle may have moved, for further comparison among peer groups, it is helpful to see how they stack up. Oracle Comparison With Peers summarizes how Oracle compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

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