When Should You Buy Oracle Corporation (NYSE:ORCL)?

Let's talk about the popular Oracle Corporation (NYSE:ORCL). The company's shares led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Oracle’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Oracle

What's the opportunity in Oracle?

According to my valuation model, Oracle seems to be fairly priced at around 2.7% below my intrinsic value, which means if you buy Oracle today, you’d be paying a fair price for it. And if you believe the company’s true value is $56.78, then there’s not much of an upside to gain from mispricing. What's more, Oracle’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Oracle generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 6.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Oracle, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in ORCL’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ORCL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Oracle. You can find everything you need to know about Oracle in the latest infographic research report. If you are no longer interested in Oracle, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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