As Oracle Corporation (NYSE:ORCL) announced its earnings release on 28 February 2019, analysts seem fairly confident, as a -1.9% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -13%. Presently, with latest-twelve-month earnings at US$3.8b, we should see this growing to US$3.8b by 2020. Below is a brief commentary on the longer term outlook the market has for Oracle. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The 34 analysts covering ORCL view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, ORCL's earnings should reach US$3.9b, from current levels of US$3.8b, resulting in an annual growth rate of 2.5%. This leads to an EPS of $3.25 in the final year of projections relative to the current EPS of $0.93. However, the expansion of the current 9.6% margin is not expected to be sustained, as it begins to contract to 9.3% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Oracle, I've put together three fundamental aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Oracle worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Oracle is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Oracle? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.