What to Expect From Oracle Earnings

This is another mega-cap software company for investors to consider, and it comes in with a grade of B- from Wall Street. Oracle stock trades at 15.5-times estimated 2015 earnings. Combined sales in Oracle’s cloud software, infrastructure and platform-as-a-service businesses were $527 million in the latest quarter, up about 29% from a year earlier.

Co-Chief Executive Officer Mark Hurd said recently that Oracle plans to make almost all of its services available via the Internet by mid-October, as the database-software company changes its business model to fit a new competitive landscape. Around 65% of Oracle’s products are available on the cloud today, and that will climb to 95% by the time the company holds its annual Oracle OpenWorld conference in October.

Hurd said in the last earnings report:

In Q4, we expect to sell over $300 million of new SaaS and PaaS annual recurring revenue. That means we have a real chance to sell more SaaS and PaaS new business this coming quarter than any other cloud services provider. I think our hyper-growth in the cloud comes as a big surprise to a lot of people.

In the previous quarter, the board declared a quarterly cash dividend of $0.15 per share, reflecting a 25% increase from the previous level. Currently the dividend has a yield of 1.4%.

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A few analysts weighed in on Oracle prior to its earnings release:

• Deutsche Bank has a Hold rating with a price target of $44.
• Piper Jaffray reiterated an Overweight rating and raised its price target to $54 from $49.
• Wunderlich initiated coverage with a Hold rating and a $47 price target.

Shares of Oracle were up nearly 2% at $44.53 on Tuesday afternoon. The stock has a consensus analyst price target of $46.50 and a 52-week trading range of $35.82 to $46.71.