What To Expect From Oracle Stock?

+3.86%
Upside
125
Market
130
Trefis
ORCL: Oracle logo
ORCL
Oracle

Oracle’s stock (NYSE: ORCL) has lost approximately 15% YTD as compared to the 18% drop in the S&P500 index over the same period. Further, at its current price of $74 per share, it is trading 15% below its fair value of $87 – Trefis’ estimate for Oracle’s valuationThe technology giant surpassed the consensus estimates for revenues and earnings in the fourth quarter of FY2022 (FY June-May). It posted total revenues of $11.8 billion – up 5% y-o-y. It was driven by a 3% increase in the cloud services & license support revenues, followed by an 18% rise in the cloud license & on-premise license revenues. On the expense front, the operating expenses as a % of revenues increased from 60% to 62% in the quarter. Further, the non-operating expenses and income tax was higher than the year-ago period. Overall, it led to a 21% y-o-y decline in the net income to $3.2 billion.

The company’s total revenues improved 5% y-o-y to $42.4 billion in FY 2022. It was mainly driven by a 5% growth in the cloud services & license support revenues, followed by a 9% rise in the cloud license & on-premise license segment. On the flip side, the operating expenses as a % of revenues jumped from 62% to 74%. Further, the non-operating expenses and effective income tax increased in the year. Altogether, it resulted in a net income of $6.7 billion – down 51% y-o-y.

Moving forward, we expect the top-line to see positive growth in Q1 FY2023. Notably, the consensus estimates for Q1 revenues and earnings are $11.3 billion and $1.08 respectively. All in all, Oracle revenues are estimated to touch $45.5 billion in FY2023. Further, ORCL’s net income margin is likely to remain around 31.4% in the year. It will likely result in a net income of $14.3 billion and an annual EPS of $5.39. This coupled with a P/E multiple of just above 16x will lead to the valuation of $87.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ORCL Return 0% -15% 92%
 S&P 500 Return -1% -18% 75%
 Trefis Multi-Strategy Portfolio -3% -18% 225%
Relevant Articles
  1. Up 11% In The Last Trading Session, What To Expect From Oracle Stock?
  2. Up 6% YTD, What To Expect From Oracle Stock In Q3?
  3. Oracle Stock To Top The Consensus In Q3?
  4. Oracle To Edge Past The Street Expectations In Q2?
  5. Oracle Stock To Beat The Consensus In Q4?
  6. Is Oracle Stock Fairly Priced?

[1] Month-to-date and year-to-date as of 9/7/2022
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates