The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Oracle's earnings available for a low price, and how does
this compare to other companies in the same industry?
Oracle is good value based on earnings compared to the US Software industry average.
Oracle is overvalued based on earnings compared to the US market.
Price based on expected Growth
Oracle's expected growth come at a high price?
Oracle is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on
Oracle is good value based on assets compared to the US Software industry average.
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is
limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($204,620,526,860).
The risk free rate of
2.47% is from the 10 year government bond rate in
The bottom-up beta is estimated by analysing other companies in the same
The Equity Risk Premium is calculated by subtracting the risk free rate from
the market return premium (7.53%) (source: Buffet).
The dividend discount model is automatically used for companies in the
following industries: Banks, Insurance, Real Estate Investment Trusts (REITs),
Diversified Financial Services and Capital Markets.
The future performance of a company is measured in the same way as past
performance, by looking at estimated
and how much profit it is expected to make.
Future estimates come from
professional analysts. Just like forecasting the weather, they don’t always get
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
expected to grow at an
Oracle's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
Oracle's earnings growth is positive but not above the US market average.
Oracle's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
High Growth Checks
Oracle's earnings are expected to grow by 6% yearly, however this is not considered high growth (20% yearly).
Oracle's revenue is expected to grow by 3.8% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return
(profit) compared to the available
funds. We do this looking forward 3 years.
Oracle is expected to efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).
Oracle's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
3/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Ms. Safra Ada Catz has been the Chief Executive Officer of Oracle Corporation since September 17, 2014 and serves as its Principal Financial Officer. Ms. Catz served as the President of Oracle Corporation from January 2004 to September 2014 and served as its Chief Financial Officer since April 25, 2011. Ms. Catz served as Chief Financial Officer of Oracle Corporation from November 15, 2005 to September 2008 and also served as its Interim Chief Financial Officer from April 2005 to July 2005. Ms. Catz served as a Co-President of PeopleSoft, Inc. since December 30, 2004. She served as the President of Oracle Corporation from January 2004 to June 2005. She served as the Executive Vice President of Oracle Corp. from November 1999 to January 2004 and was responsible for Global Business Practices and Corporate Development. She served as Senior Vice President of Oracle Corp., from April 1999 to October 1999. Prior to joining Oracle, Ms. Catz was employed by Donaldson, Lufkin & Jenrette, a global investment bank which has since merged with Credit Suisse First Boston. At Donaldson, Lufkin & Jenrette, Ms. Catz served as the Managing Director from February 1997 to March 1999 and a Senior Vice President from January 1994 to February 1997 and previously held various investment banking positions since 1986. Ms. Catz has been a Director of Oracle Corporation since October 2001. She has been a Member of Executive Council of TechNet since March 14, 2013. Ms. Catz served as an Independent Non-Executive Director of HSBC Holdings plc from May 1, 2008 to December 31, 2015. She served as a Director of PeopleSoft Inc. since December 30, 2004 and Stellent Inc. since December 12, 2006. She served as a Director of Hyperion Solutions Corp. since April 14, 2007.
Safra's compensation has been consistent with company performance over the past year.
Safra's compensation appears reasonable for a company of this size and profit level.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Oracle management team is over 5 years, this suggests they are a seasoned and experienced team.
CEO, Principal Financial Officer & Director
CEO & Director
President of Product Development
Senior Vice President of Worldwide Operations
Senior VP & Chief Information Officer
Senior Vice President of Investor Relations
Senior VP & GM-Communications
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Oracle board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Can Oracle Corporation (NYSE:ORCL) Continue To Outperform Its Industry?
View our latest analysis for Oracle Breaking down ROE — the mother of all ratios Firstly, Return on Equity, or ROE, is simply the percentage of last years’ earning against the book value of shareholders’ equity. … ROE can be split up into three useful ratios: net profit margin, asset turnover, and financial leverage. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity NYSE:ORCL Last Perf Feb 16th 18 Essentially, profit margin shows how much money the company makes after paying for all its expenses.
Are Oracle Corporation's (NYSE:ORCL) Interest Costs Too High?
Check out our latest analysis for Oracle How does ORCL’s operating cash flow stack up against its debt? … Additionally, ORCL has generated cash from operations of $14,126.0M over the same time period, resulting in an operating cash to total debt ratio of 24.39%, signalling that ORCL’s current level of operating cash is high enough to cover debt. … Next Steps: At its current level of cash flow coverage, ORCL has room for improvement to better cushion for events which may require debt repayment.
Interested In Oracle Corporation (NYSE:ORCL)’s Upcoming $0.19 Dividend? You Have 4 Days Left
Important news for shareholders and potential investors in Oracle Corporation (NYSE:ORCL): The dividend payment of $0.19 per share will be distributed into shareholder on 24 January 2018, and the stock will begin trading ex-dividend at an earlier date, 09 January 2018. … View our latest analysis for Oracle 5 questions I ask before picking a dividend stock When researching a dividend stock, I always follow the following screening criteria: Is their annual yield among the top 25% of dividend payers? … The current payout ratio for the stock is 30.05%, which means that the dividend is covered by earnings.
A Look At The Intrinsic Value Of Oracle Corporation (NYSE:ORCL)
5-year cash flow estimate 2017 2018 2019 2020 2021 Levered FCF (USD, Millions) $11,765.74 $13,609.87 $14,242.57 $15,928.08 $15,244.00 Source Analyst x20 Analyst x19 Analyst x19 Analyst x5 Analyst x1 Present Value Discounted @ 10.19% $10,677.34 $11,208.36 $10,644.38 $10,802.88 $9,382.51 Present Value of 5-year Cash Flow (PVCF)= $52,715 The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … Terminal Value (TV) = FCF2021 × (1 + g) ÷ (r – g) = $15,244 × (1 + 2.5%) ÷ (10.2% – 2.5%) = $202,247 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = $202,247 / ( 1 + 10.2%)5 = $124,481 The total value is the sum of cash flows for the next five years and the discounted terminal value, which results in the Total Equity Value, which in this case is $177,196. … NYSE:ORCL Intrinsic Value Dec 14th 17 Important assumptions I'd like to point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.
How Oracle Corporation (ORCL) Delivered A Better ROE Than Its Industry
However, ROE only measures returns against equity, not debt. … Return on Equity = Net Profit ÷ Shareholders Equity ROE is measured against cost of equity in order to determine the efficiency of ORCL’s equity capital deployed. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity NYSE:ORCL Last Perf Nov 7th 17 The first component is profit margin, which measures how much of sales is retained after the company pays for all its expenses.
Does Oracle Corporation's (ORCL) PE Ratio Signal A Buying Opportunity?
Formula Price-Earnings Ratio = Price per share ÷ Earnings per share P/E Calculation for ORCL Price per share = 49.35 Earnings per share = 2.355 ∴ Price-Earnings Ratio = 49.35 ÷ 2.355 = 21x The P/E ratio itself doesn’t tell you a lot; however, it becomes very insightful when you compare it with other similar companies. … For example, if you accidentally compared higher growth firms with ORCL, then ORCL’s P/E would naturally be lower since investors would reward its peers’ higher growth with a higher price. … Alternatively, if you inadvertently compared less risky firms with ORCL, ORCL’s P/E would again be lower since investors would reward its peers’ lower risk with a higher price as well.
Oracle Corporation develops, manufactures, markets, sells, hosts, and supports application, platform, and infrastructure technologies for information technology (IT) environments worldwide. It provides services in three primary layers of the cloud: Software as a Service, Platform as a Service, and Infrastructure as a Service. The company licenses its Oracle Database software, which enables storage, retrieval, and manipulation of data; and Oracle Fusion Middleware software to build, deploy, secure, access, and integrate business applications, as well as automate their business processes. It also provides software for mobile computing to address the development needs of businesses; Java, a software development language; and big data solutions. In addition, the company offers human capital and talent management, enterprise resource planning, customer experience and customer relationship management, procurement, project portfolio management, supply chain management, business analytics and enterprise performance management, and industry-specific application software, as well as financial management and governance, risk, and compliance applications. Further, it provides Oracle Engineered Systems, servers, storage, industry-specific hardware, management software, and hardware support products, as well as operating systems, and virtualization and other hardware-related software. Additionally, the company offers customers software license updates and product support contracts; database, middleware, and development software, as well as cloud-based platform and infrastructure; and IT strategy alignment, enterprise architecture planning and design, initial software implementation and integration, application development and integration, security assessments, and ongoing software enhancements and upgrade, as well as customer support and education services. The company was founded in 1977 and is headquartered in Redwood City, California.
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