馃捇 ORACLE CORPORATION: ANALYSIS 馃捇
Oracle Corporation offers products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offering include various cloud software applications. The company also offers cloud-based industry solutions for various industries; Oracle application licenses; and Oracle license support services. In addition, it provides cloud and license business' infrastructure technologies, such as the Oracle Database and MySQL Database; Java, a software development language; and middleware, including development tools and others. The company's cloud and license business' infrastructure technologies also comprise cloud-based compute, storage, and networking capabilities; and Oracle autonomous database, MySQL HeatWave, Internet-of-Things, digital assistant, and blockchain. Further, it provides hardware products and other hardware-related software offerings, including Oracle engineered systems, enterprise servers, storage solutions, industry-specific hardware, virtualization software, operating systems, management software, and related hardware services; and consulting and customer services.
Based on a sample of the last year [Nov/23 TTM], its average margins have been:
- Gross margin: ≈ 72.9%
- Operating margin: ≈ 28.3%
- EBITDA margin: ≈ 38.7%
- Net margin: ≈ 18.4%
Pros:
- Good brand positioning as business software in large companies.
- Acceptable margins for your main business sector.
- Decreases in total debt and stabilization of ROE
Cons:
- Growth CAPEX reduction and high operating costs
- Not a big or surprising guidance 2024
- High Net Debt ratio
Based on the last report, their normalized EPS was ≈ $3.68 USD and its last average ROIC [TTM] was ≈ 17.03%. If an average Forward PER 30 is set as a benchmark with an EPS intensity of ± 20.69%, the potential forward spread target could be:
- Optimistic: ≈ $133.52 USD
- Neutral: ≈ $110.63 USD
- Negative: ≈ $87.75 USD
At least, an EPS of $0.7133 USD is required for the next quarter, to keep the metrics.
In other hand, if an average Forward EV/EBITDA 20 is set, an EBITDA increases of ± 11%, a Net Debt increases of 24%, a Dividends increase of 25% and Shares Outstanding increases of 1.66%, the potencial spread price target could be:
- Optimistic: ≈ $123.28 USD
- Neutral: ≈ $116.85 USD
- Negative: ≈ $91.70 USD
Finally, according to i current P/S ration, a possible spread might be at:
- P/S 4: ≈ $75 USD
- P/S 8: ≈ $150 USD
The best analysis is yours!
M.F. J. Joel Padilla
Copyright: Joel Padilla 2023
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