Oracle (New York Stock Exchange: ORCL) is one of the biggest names in computer technology, offering a suite of cloud-based applications and full cloud infrastructure operations. Looking at the overall state of Oracle and what the company is doing now should be encouraging to Oracle investors. In fact, I’m bullish on Oracle right now, thanks to a series of factors.
The company released earnings data after today’s market close, highlighting last quarter’s performance. The results for Oracle turned out to be somewhat mixed. His non-GAAP earnings per share came to $1.03 per share. This falls slightly short of his TipRanks consensus, which was asking for $1.08 per share. But my income was a little better. Total revenue for the first quarter was $11.4 billion, in line with analyst expectations but above company guidance.
Oracle’s significant increase in revenue can be traced directly to its acquisition of medical records company Cerner. But that’s not the only thing that’s driving Oracle’s growth.
Cerner increased revenue by 23%. Without it he was up 8%. The news was enough for Oracle to declare a cash dividend of $0.32 per share for his October 25 payment date.
Oracle’s stock has started well over the past 12 months, embarking on a multi-month decline, but has recently turned around. So far this year, Oracle stock has sold about $88 before reaching his 52-week high of $105.06. Currently, the company’s prices range from $77 to $78.
Is Oracle stock a trade?
Looking to Wall Street, Oracle’s consensus rating is medium buy. This is based on 8 buys, 11 holds and 1 sell allocated over the last 3 months. Oracle’s average price target is $89.33, implying a 15.89% upside potential.
Analyst price targets range from as low as $70 to as high as $115 per share.
Investor sentiment is up – most of the time
Right off the bat, Oracle has one advantage. Oracle currently has a smart score of 9 out of 10 on TipRanks. This marks him at his second highest level of “outperform”. This makes Oracle stock much more likely to outperform than the broader market.
Even better for Oracle are the recent numbers on insider trading. Oracle insiders have been buying Oracle stock at a rather frantic pace over the past few months. In the past three months, Oracle insiders have bought more than $208 million in stock. The biggest such contributor is Larry Ellison’s purchase of his $208.04 million stake.
However, it’s worth noting that shortly before that, CEO/Director Safra Catz sold shares worth more than $204.4 million in an uninformative sale. Catz made her second non-profitable sale for just over $135.5 million shortly after acquiring Ellison.
Looking at aggregates is even better for Oracle. In the last 12 months, there have been 18 buys and he 14 sells, with significantly more buys than sells. While most of these deals are still not considered profitable, there are still a significant number of purchases being made against sales activity.
Product Line Diversification Proves Oracle’s Savings Benefit
Oracle is certainly not a common word. Most people have little contact with Oracle systems. However, their work can be heavily dependent on Oracle and its systems. As such, it’s good that Oracle seems to have the house on fire even in this economic climate. The last few days have seen some significant Oracle-related activity. Accenture (New York Stock Exchange: ACN), for example, it recently acquired supply chain management business Inspirege to strengthen its Oracle-focused business.
All of Inspirage’s 710 employees will become Accenture employees and will be tasked with helping companies implement Oracle products such as Oracle Autonomous Cloud.
Clearly, Accenture hopes Oracle will continue to produce in a big way. After all, Accenture and Oracle have worked closely together for the past 30 years. Just a week ago, analysts expected Oracle to release figures that would eventually overtake Google Cloud as the fastest growing provider of cloud systems.
If you beat Google at something, you obviously did something right. Even being in a position to compete with Google is a real step forward. One of the biggest steps to reach that position is having a solid product line that works together.
tech republic We recently did a head-to-head comparison between Oracle and Workday (NASDAQ: Weekdays) and found the two to be relatively similar. However, Oracle’s superiority in performance management and international payroll made it well suited to the needs of large companies. Large companies are most likely to survive the upcoming recession. This puts suppliers such as Oracle in a better position.
Throwing in the diversity of Oracle’s product range only improves the picture. Our presence in healthcare, government, education, and a variety of other markets helps us ensure we sell somewhere.
Bottom Line: ORCL Stocks Offer Solid Opportunities
There’s a reason we’re bullish about Oracle. The first of these is the overall price level. The company is trading just above its floor price target. It suggests a decent entry point. Granted, it’s not as good as June, but there’s still plenty of upside potential.
Looking at the insider trading numbers, it’s clear that insiders waited for the bottom to buy in bulk and bought in bulk. Safra Catz’s overzealous sale may be a little worrying, but given the sheer number of insider purchases, this is worth reconsidering. Developing close relationships with large companies increases your chances of surviving an economic downturn.
Oracle remains well positioned going forward. It’s grown big enough to challenge Google itself, but it’s no small feat. Combine that with a decent price and it becomes much more attractive. That’s why I’m bullish on Oracle.
Disclosure
The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.
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