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.
ORCL in downward trend: 10-day moving average broke below 50-day moving average on April 23, 2024
The 10-day moving average for ORCL crossed bearishly below the 50-day moving average on April 23, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 16 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on April 01, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on ORCL as a result. In of 79 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for ORCL turned negative on March 28, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 43 similar instances when the indicator turned negative. In of the 43 cases the stock turned lower in the days that followed. This puts the odds of success at .
ORCL moved below its 50-day moving average on April 17, 2024 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ORCL declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for ORCL entered a downward trend on April 23, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Indicator shows that the ticker has stayed in the oversold zone for 3 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an Uptrend is expected.
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 18 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
ORCL may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 90, placing this stock better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. ORCL’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (61.350) is normal, around the industry mean (29.871). P/E Ratio (33.108) is within average values for comparable stocks, (155.580). Projected Growth (PEG Ratio) (1.057) is also within normal values, averaging (2.725). Dividend Yield (0.013) settles around the average of (0.081) among similar stocks. P/S Ratio (6.720) is also within normal values, averaging (55.320).
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a developer of a diversified line of business software products
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