The Two Things You Need To Know About Oracle’s FQ1 Report

The Two Things You Need To Know About Oracle’s FQ1 Report

Oracle (NASDAQ:ORCL) is an important company to watch for more reasons than one. In regard to the earnings cycle, it reports mid-way between peaks marking the low point of the cycle.

In regard to its business, the company can give deep insight into the SaaS and now Cloud Computing industries, and this quarter is no exception. The fiscal Q1/calendar Q3 report reveals two things about the market that investors need to know.

.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; }

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2022 hedge fund letters, conferences and more

The Story Behind Buffett’s Love Of Occidental

Berkshire Hathaway Warren BuffettBerkshire Hathaway Warren BuffettIn the middle of August the Federal Energy Regulatory Commission (FERC) gave Berkshire Hathaway Inc permission to buy up to 50% of oil company Occidental Petroleum Corp common stock. Berkshire, which is controlled by the Oracle of Omaha Warren Buffett, has been aggressively buying shares in the oil group for the past year. The size Read More

Table of Contents

Find A Qualified Financial Advisor

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

The first is that demand for cloud computing is still strong at the infrastructure and SaaS levels which is good news for companies from Microsoft (NASDAQ:MSFT) to Amazon (NASDAQ:AMZN) and Zscaler (NASDAQ:ZS) to Salesforce (NASDAQ:CRM).

The second is that FX headwinds are strong. The dollar index is trending strongly higher and up 22% over the last 18 months alone and that is digging into offshore and bottom-line profits. 

Oracle Had A Great Quarter Despite Headwinds 

Oracle had a great quarter despite the headwinds and the results can only be called weak when compared to the analyst’s expectations. The company brought in $11.45 billion in net revenue which is up 17.7% including the acquisition of Cerner.

On an organic basis, the company’s revenue is up 8% with strength in the cloud leading the way. The company’s cloud revenue grew 45% YOY to $3.6 billion and is now 30% of the net. On an FX-neutral basis, however, topline growth would have been 430 bps higher with corresponding strength in all segments.

Looking deeper into the cloud numbers, Cloud Infrastructure grew by 53% and was offset by a smaller 43% gain in Cloud Applications. Within the applications segment, Fusion ERP grew 33% and Netsuite by 27%. 

“This is the first quarter we owned Cerner and they just delivered the best revenue quarter in their history. We expect Cerner to do even better in the coming quarters as we develop an all-new suite of healthcare cloud services,” said Oracle CEO, Safra Catz

Moving down to the earnings there is some bad news in that margins contracted and slightly more than expected. The good news is that margin contraction did not fully offset the revenue strength so there is some YOY growth just $0.04 less than expected at $1.03. The mitigating factor is FX which impacted results more than feared and shaved $0.08 off the GAAP and adjusted results. 

The Analysts Weren’t Overwhelmed By Oracle’s Results 

The analysts weren’t overwhelmed by Oracle’s message for the market but the chatter has so far been favorable. The four commentaries out so far include three price target increases that have the consensus figure edging higher in the 30 and 90-day periods which isn’t all that bullish.

The sentiment is only a Hold, as well, which doesn’t offer much support unless the results start to attract some upgrades. The consensus price target of $89.90 is about 17% above the pre-release close so there is some upside available although general market conditions may keep the stock from moving much higher. 

The Technical Outlook: Oracle Bottomed But…

Oracle bottomed over the past few quarters but it may not have made a full reversal. It looks like the stock is range bound between $66 and $80 and possibly heading lower in the near to short-term. Longer-term, the company’s growing cloud business should support higher stock prices and there is the dividend as well.

The company is paying a dividend worth about 1.7% in yield and there is an outlook for distribution growth. The company has been raising the dividend for the last 7 years and is only paying about 25% of its earnings. In this light, a move to the bottom of the range (or a confirmation of support inside the range) could be an attractive entry point for long-term and/or income investors.


Should you invest $1,000 in Oracle right now?

Before you consider Oracle, you’ll want to hear this.

MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Oracle wasn’t on the list.

While Oracle currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Article by Thomas Hughes, MarketBeat

Comments are closed.