Mixed signals toward Oracle after post-earnings pullback
Tech giant Oracle (NYSE: ORCL) surprised investors earlier this month when it reported earnings a day earlier than expected. The company matched on the bottom line with EPS of $0.81, but it missed on the top line with revenue of $9.21 billion. The company also announced that CEO Mark Hurd would be taking a medical leach of absence. All of this information was a lot for investors to digest and in the end, they sold the stock.
The stock closed at $56.29 on September 11 and Oracle made the announcements after the closing bell that day. The stock would eventually fall to a low of $51.85 on September 18 for a loss of 7.89% in one week. The stock has since bounced back a little and the overbought/oversold indicators seem to have reversed course without even reaching oversold territory.
If you connect the lows from June and August, it creates an upwardly sloped trend line and last week’s low hit right on that trend line before the stock reversed higher. The slope of the line isn’t very steep, but it is upwardly sloped never the less.
Oracle has been slightly better than average in terms of its price performance over the past year. The Relative Strength rating from Investor’s Business Daily is 58 and the Price Growth Rating from Tickeron is 42. Those readings are indicative of steady growth that is slightly better than the average stock.
From a fundamental perspective, Oracle has been better than average. One particular area where the company is far better than most companies is in its management efficiency measurements. The company boasts a return on equity of 38.6% and a profit margin of 40.8%. This helped the company get an SMR rating of 13 from Tickeron. SMR is an acronym that stands for Sales, Margin, and Return on Equity. The rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents.
Another rating from Tickeron that is better than average for Oracle is the Profit vs. Risk Rating. For Oracle, the reading is 38 and that indicates well-balanced risk and returns. The average Profit vs. Risk Rating for the industry is 79, placing this stock slightly better than average.
One area of concern for Oracle is the Tickeron Valuation Rating. Oracle’s current rating is 74 and that indicates that the company is slightly overvalued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization.
The sentiment toward Oracle is slightly more bearish than average and that is mainly due to the short interest ratio. The current reading is at 4.0 and that is slightly above average and indicates a little more pessimism toward the stock than the average stock. The average short interest ratio is right around the 3.0 level.
Analysts’ ratings for Oracle fall right in to the average range in terms of the overall buy percentage. There are 34 analysts covering the stock with 24 “buy” ratings, nine “hold” ratings, and one “sell” rating. This puts the buy percentage at 70.6% and that falls right in the middle of the average range from 65% to 75%.
The overall take on Oracle is that it is slightly above average with its fundamental indicators, it has performed slightly better than average in its price performance, and it is slightly better than average in its sentiment readings (from a contrarian viewpoint). What this all suggests to me is that the stock is likely to move with the market—up or down.
