Oracle Stock Analysis – Triple EPS Growth!

Oracle (ORCL) is one company name that will always come up if you are into IT infrastructure. Oracle is one of those names that you will not know much of as an IT consumer but if you are in B2B, then your ears cannot escape this name. I have always known Oracle as an IT giant but never really studied their financials before so I am actually looking forward to this Oracle Stock Analysis. Hopefully, we can have another good prospect in our watch list.

As always, my goals with this Oracle Stock Analysis is to keep things simple and straightforward with no bias. Remember to leave a comment at the end of this analysis if you find it helpful…

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Oracle Stock Analysis – Business Snapshot

Oracle Stock Analysis - Business Snapshop
Oracle Stock Analysis – Business Snapshot

Now a little on Oracle… it’s in short an IT infrastructure company. I do not want to pretend that I know what they do exactly because all I know is they an into corporate IT infrastructure. And as little as I know about what they do exactly… I know this… once a business gets involved with Oracle, it’s going to be very difficult to move away from Oracle and they have the ability to charge a premium. And as investors, we want a company that has recurring income and the ability to charge a premium. Let’s look into Oracle financials and see if this ability gets translated down into their Financial statements.


Oracle Stock Analysis – Earnings Per Share

A look at Oracle 10 year EPS track record makes me wonder how I did not researched more into Oracle years ago. However, it’s always never too late…

Oracle Stock Analysis - 10 year Earnings Per Share Track Record
Oracle Stock Analysis – 10 year Earnings Per Share History

$0.64 EPS in 2006 and growing steadily for the past 10 years to $2.21 EPS in 2015! Wow! That’s a really good run. And I like it because it’s steady and predictable with really not much surprise. Just looking at this EPS track record, I am having the feeling that Oracle is a giant money making machine. Let’s look at their debt gearing next…


Oracle Stock Analysis – Debt Equity Ratio

Oracle Stock Analysis - Debt Equity Ratio
Oracle Stock Analysis – Debt Equity Ratio

While the EPS growth in Oracle for the past 10 years has been consistent, predictable and solid, their Debt Equity ratio is also growing (although not at an alarming rate yet). Personally, I like companies with 0.50 D/E ratio and Oracle has move above it at 0.87… it’s higher that what I prefer but it’s really still acceptable. However, this ratio has to be watched closely every quarter….


Oracle Stock Analysis – Return on Equity

Oracle Stock Analysis - Return on Equity Ratio
Sirius XM Stock Analysis – 10 year Return on Equity Track Record

Oracle ROE numbers look impressive. A sign of strong management. It has declined a little in recent years but it’s still coming in at a respectable 20% for 2015 and that’s really not easy to maintain for a long period especially over 10 years.


Oracle Stock Analysis – Operating Cash Flow

Oracle Stock Analysis - Operating Cash Flow HistoryOracle Stock Analysis – Operating Cash Flow

And with the Operating Cash Flow, it’s now safe to say that Oracle is a solid company that is well managed and is growing steadily despite its size. For the past 10 years, operating cash flow more than tripled and that’s really not an easy feat. Oracle surely deserves a slot in our watch list.


Should You Buy Oracle Stocks?

I guess at the end of every stock analysis… the most important question is what price should we buy. And yeah… we already know Oracle is a solid company and we should get involve with it… BUT only if the price is right. So let’s look at the price now…

Should You Buy Oracle Stocks?Should You Buy Oracle Stocks?

At the point of this writing, ORCL is priced at $40 which is a little to high for me now. I am only interested in Oracle at $30.45 or below. So this is another one that will be on the waiting list. The current price is too high… it might not see $30.45 for a long time but heck! what we have is time. Better to stay on the sidelines on this for now than to enter at a high price and regret later. Remember this… entering at a price higher than valuation increases your risk. So stay safe by waiting…

Good luck and please leave a comment below as I love to hear from you.

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