Conservative · Stocks to Consider and Updates

Oracle Reports Earnings In Line on Revenue Miss; Ups Share Buybacks

For the first fiscal quarter, Oracle Corp. (NYSE: ORCL – $53.37) posted revenue of $9.22 billion, up slightly from a year ago and a hair below consensus at $9.29 billion. Adjusted earnings per share came in at $0.81 compared to $0.71 last year and in line with expectations. Oracle had projected earnings for the quarter of $0.80 to $0.82 a share. “As our low-margin hardware businesses continue to get smaller, while our higher-margin cloud business continues to get bigger, we expect Oracle’s operating margins, earnings per share and free cash flow all to grow,” Co- CEO Safra Catz said in a statement, adding “that the company expects the 2020 fiscal year to be the third consecutive year of double-digit (adjusted) per-share earnings growth”. Oracle also said its board has approved a $15 billion increase in its stock repurchase plan. In the latest quarter, the company repurchased about $5 billion of its common shares. In addition to the earning’s release, Oracle said Co-Chief Executive Officer Mark Hurd would be taking a medical leave, which caught Wall Street by surprise and sent the shares lower.

      Oracle should continue to have a large degree of success in its transition from a server-based to a cloud platform given its longstanding customer relationships and the operating cost/performance its systems offer.  Meanwhile, revenue, net income and cash flow should advance moderately over time as the transition progresses, with per-share figures benefiting from stock purchases. The shares, yielding 1.7%, remain suited for long-term conservative investors.

 

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