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Is ORCL A Top Tech Stock?

Brian Bolan

Oracle (ORCL) is in the news today following some strong earnings.  The stock is making fresh 52 week highs and is up around 7%.  Let’s take a look at the report, what analysts are saying and if this stock should get some consideration in your own portfolio.

The Report

ORCL reports revenue in three segments, Software and Cloud, Hardware and finally Services.  Of the three groups, only Software and Cloud came in ahead of expectations but that was enough to drive total revenue to $9.27B when the Street was looking for $9.26B.

The company reported EPS of $0.63 when the Zacks Consensus was calling for $0.57.  That translates into a positive earnings surprise of 10.5% with a beat of $0.06.

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Dividend

The company noted that they are raising their dividend to $0.19 from $0.15.  That is a 27% increase and not something you want to see from a growth company.  In fact, the stock has an “F” for its Growth Style Score.  Value, on the other hand, is not terrible.  The stock is trading at 18x forward earnings which are right around the market’s historical multiple.

 

Oracle Corporation Dividend Yield (TTM)

Oracle Corporation Dividend Yield (TTM) | Oracle Corporation Quote

 

Guidance

The company guided Wall Street to $0.78-$0.82 for next quarter when the expectation was for $0.78.  Revenue is expected to increase 1%-2% on a constant currency basis.  Currency is expected to be a significant headwind that could account for revenues to be impacted by 2% and EPS to be adjusted by around $0.02.

Analysts

JMP Securities liked the quarter and moved the stock to market perform from market underperform.  JP Morgan increased their price target to $51 from $42.  Cowen raised their target to $48 from $46 and noted that there is good visibility.

Zacks Rank

Right now, ORCL is a Zacks Rank #3 (Hold), but that could change as the estimate changes roll into our system.  The Zacks Rank looks at all the earnings estimate revisions and looks for the strongest moves.  Check back in a day or two to see if ORCL can move up on Zacks Rank thanks to this quarter.

ORCL In A Tech Portfolio?

The quarter was a good one and we are seeing higher price targets and at least one upgrade.  That said, the dividend increase makes me think that this stock wants to be more of a value play that what most investors think of when they search for ‘top tech stocks’ or something similar.  Yes, ORCL has a spot in tech as a benchmark name, but I want something more from the tech stocks that I put in my portfolio. 

This would be a name you would put cash into as a placeholder instead of just having cash.  Over the last year, this stock has traded in a range between $39 and $42.  With a breakout over $46 we could be setting up for a solid drift higher into the next report, but I would be surprised to see it reach $50 anytime soon. 

 

Oracle Corporation Price, Consensus and EPS Surprise

Oracle Corporation Price, Consensus and EPS Surprise | Oracle Corporation Quote


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