120 100 80 64 48
32 24 20 16 12
8
Percent shares traded
30 20 10
Target Price Range 2019 2020 2021
ORACLE NYSE-ORCL 38.46 14.7 14.614.0 0.81 1.6% TIMELINESS 3 Lowered 9/11/15 SAFETY 1 Raised 5/22/09 TECHNICAL 3 Lowered 11/11/16 BETA 1.05 (1.00 = Market)
2019-21 PROJECTIONS Ann’l Total
Price Gain Return High 60 (+55%) 13% Low 50 (+30%) 9% Insider Decisions
D J F M A M J J A to Buy 0 0 0 0 0 0 0 0 0 Options 4 1 2 4 2 1 6 7 2 to Sell 3 1 1 4 3 1 3 1 2 Institutional Decisions
4Q2015 1Q2016 2Q2016 to Buy 586 621 597 to Sell 760 745 741 Hld’s(000)245015124749762408086
High: 14.5 19.8 23.3 23.6 25.1 32.3 36.5 34.3 38.3 46.7 45.3 42.0 Low: 11.3 12.1 16.0 15.0 13.8 21.2 24.7 25.3 29.9 35.4 35.1 33.1
% TOT. RETURN 10/16 THIS VL ARITH.*
STOCK INDEX 1 yr. 0.5 6.4 3 yr. 19.5 15.7 5 yr. 24.4 76.0
CAPITAL STRUCTURE as of 8/31/16 Total Debt $54056 mill. Due in 5 Yrs $16150 mill. LT Debt $53057 mill. LT Interest $1800 mill.
(53% of Cap’l) Leases, Uncapitalized Annual rentals $328.0 mill.
No Defined Benefit Pension Plan Pfd Stock None
Common Stock 4,105,567,000 shs. as of 9/12/16
MARKET CAP: $158 billion (Large Cap) CURRENT POSITION 2015 2016 8/31/16
($MILL.) Cash Assets 54368 56125 68396 Receivables 5618 5385 3407 Inventories (FIFO) 314 212 286 Other 2883 2591 2362 Current Assets 63183 64313 74451 Accts Payable 806 504 551 Debt Due 1999 3750 999 Deferred Revenue 7245 7655 9462 Other 5241 5299 4130 Current Liab. 15291 17208 15142
ANNUAL RATES Past Past Est’d ’13-’15 of change (per sh) 10 Yrs. 5 Yrs. to ’19-’21 Sales 15.5% 12.0% 7.0% ‘‘Cash Flow’’ 17.5% 14.0% 6.5% Earnings 18.0% 13.5% 6.0% Dividends – – 39.0% 7.5% Book Value 20.5% 15.0% 3.5%
Fiscal Year Ends
Full Fiscal Year
QUARTERLY SALES ($ mill.)A Aug.Per Nov.Per Feb.Per May.Per
2013 8209 9113 8970 10961 37253 2014 8381 9283 9315 11326 38305 2015 8599 9608 9334 10712 38253 2016 8452 8996 9014 10594 37056 2017 8613 9150 9250 10487 37500 Fiscal Year Ends
Full Fiscal Year
EARNINGS PER SHARE AB Aug.Per Nov.Per Feb.Per May.Per
2013 .53 .64 .65 .87 2.68 2014 .59 .69 .68 .92 2.87 2015 .62 .69 .68 .78 2.77 2016 .53 .63 .64 .81 2.61 2017 .55 .61 .65 .82 2.63 Cal- Full
endar Year QUARTERLY DIVIDENDS PAID E
Mar.31 Jun.30 Sep.30 Dec.31 2012 .06 .06 .06 .24 .42 2013 – – – – .12 .12 .24 2014 .12 .12 .12 .12 .48 2015 .12 .15 .15 .15 .57 2016 .15 .15 .15 .15
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1.80 1.94 1.78 1.81 1.96 2.36 2.82 3.57 4.39 4.69 5.38 7.07 7.59 8.02 .44 .52 .48 .50 .56 .73 .85 1.09 1.37 1.53 1.75 2.32 2.65 2.91 .35 .46 .39 .43 .50 .68 .80 1.01 1.30 1.44 1.67 2.22 2.46 2.68 – – – – – – – – – – – – – – – – – – .05 .20 .20 .24 .30
.05 .06 .05 .06 .04 .04 .05 .06 .05 .11 .05 .09 .13 .14 1.15 1.12 1.13 1.21 1.55 2.11 2.87 3.31 4.47 5.01 6.13 7.85 8.91 9.61
5615.1 5592.4 5431.0 5233.0 5171.0 5145.0 5232.0 5107.0 5150.0 5005.0 5026.0 5068.0 4905.0 4646.0 NMF NMF 36.8 24.6 25.1 17.9 16.3 17.0 15.8 13.1 13.7 13.0 12.0 12.0 NMF NMF 2.01 1.40 1.33 .95 .88 .90 .95 .87 .87 .82 .76 .67
– – – – – – – – – – – – – – – – – – .3% .9% .7% .8% .9%
14771 18208 22609 23495 27034 35850 37221 37253 41.9% 42.1% 43.9% 47.3% 47.2% 45.3% 47.5% 48.7% 223.0 249.0 268.0 263.0 298.0 368.0 486.0 546.0
4246.0 5295.0 6799.0 7393.0 8494.0 11395 12520 12958 29.7% 28.6% 29.5% 28.7% 27.1% 25.3% 24.0% 23.0% 28.7% 29.1% 30.1% 31.5% 31.4% 31.8% 33.6% 34.8% 5044.0 3496.0 8074.0 9432.0 12313 24982 24635 28820 5735.0 6235.0 10235 9237.0 11510 14772 13524 18494 15012 16919 23025 25090 30798 39776 43688 44648 20.9% 23.6% 21.0% 22.3% 21.0% 21.6% 22.6% 21.2% 28.3% 31.3% 29.5% 29.5% 27.6% 28.6% 28.7% 29.0% 28.3% 31.3% 29.5% 28.5% 24.3% 26.0% 25.9% 25.8%
– – – – – – 3% 12% 9% 10% 11%
2014 2015 2016 2017 © VALUE LINE PUB. LLC 19-21 8.58 8.81 8.97 9.50 Sales per sh A 12.30 3.10 3.04 2.93 3.20 ‘‘Cash Flow’’ per sh 4.15 2.87 2.77 2.61 2.63 Earnings per sh AB 3.65 .48 .51 .60 .64 Div’ds Decl’d per sh E .76 .13 .32 .29 .25 Cap’l Spending per sh .25
10.50 11.21 11.45 11.65 Book Value per sh D 13.10 4464.0 4343.0 4131.0 3950.0 Common Shs Outst’g C 3450.0
12.5 15.1 14.8 Avg Ann’l P/E Ratio 15.0 .66 .77 .78 Relative P/E Ratio .94
1.3% 1.2% 1.6% Avg Ann’l Div’d Yield 1.4%
38305 38253 37056 37500 Sales ($mill) A 42500 48.9% 47.3% 44.9% 45.5% Operating Margin 47.0% 608.0 712.0 871.0 900 Depreciation ($mill) 1000 13214 12489 11236 11785 Net Profit ($mill) 13375 22.5% 23.6% 23.2% 25.5% Income Tax Rate 24.0% 34.5% 32.6% 30.3% 31.4% Net Profit Margin 31.5% 33749 47892 47105 50000 Working Cap’l ($mill) 50000 22667 39959 40105 53000 Long-Term Debt ($mill) 53000 46878 48663 47289 46000 Shr. Equity ($mill) 45250 19.7% 14.7% 13.7% 13.0% Return on Total Cap’l 14.5% 28.2% 25.7% 23.8% 25.5% Return on Shr. Equity 29.5% 23.5% 21.0% 18.3% 20.0% Retained to Com Eq 23.5%
16% 18% 23% 22% All Div’ds to Net Prof 20%
Company’s Financial Strength A++ Stock’s Price Stability 75 Price Growth Persistence 70 Earnings Predictability 85
(A) Fiscal year ends May 31st. (B) Diluted earnings. Excl. nonrec. items: ’00, 70¢; ’05, d13¢; ’06, d12¢; ’07, d20¢; ’08, d24¢; ’09, d35¢; ’10, d46¢; ’11, d55¢;
’12, d50¢; ’13, d60¢; ’14, d49¢; ’15, d56¢; ’16, d54¢. Next earnings report due mid-Dec. (C) In millions. (D) Incl. intang. In 2016, $34.6 bill., $8.38 a share.
(E) Initial div’d paid May 8, 2009. Div’ds paid late January, April, July, and October. Div’ds ($0.06 ea.) for February, May, and August of CY2013 were paid in December, 2012.
BUSINESS: Oracle Corporation develops, manufactures, markets, distributes, and services database and middleware software, app- lications software, and hardware systems, primariy consisting of computer server and storage products. 2016 revenue breakdown: new software licenses, 19.6%; cloud SaaS, PaaS, & IaaS, 7.7%; software license updates and product support, 50.9%; hardware
systems & support, 12.6%; services, 9.2%; foreign sales, 53.4%. R&D, 15.6% of 2016 sales. Employed 136,000 at 5/31/16. Stock owners: Lawrence J. Ellison, 28%; other off. & dir., 1% (9/16 proxy). Exec Chrmn & CTO: Lawrence J. Ellison; Co-CEOs: Safra A. Catz and Mark V. Hurd. Inc.: DE. Addr.: 500 Oracle Parkway, Redwood City, CA 94065. Tel.: 650-506-7000. Internet: www.oracle.com.
Oracle Corporation began fiscal 2017 with mixed financial results. (Years end May 31st.) The company continued to register strong growth in cloud services, with its software-as-a-service (SaaS) and platform-as-a-service (PaaS) offerings remaining on a rapid advance. Nonethe- less, revenue from new software licenses once again found progress elusive, as large enterprises continue to work their way to finding a balance between their on- premise requirements and the advantages afforded by cloud architecture. That said, overall software revenues advanced mod- erately, benefiting from the combination of progress at license updates and support and the strength in cloud services. Finally, although the margin widened in the hardware business, profits declined. We have made adjustments to our es- timates for fiscal 2017. Although SaaS and PaaS should remain on a steep trajec- tory, growth in overall software revenue may well turn out to be more modest than earlier anticipated, reflecting the likely decline in new software licenses and slow- ing progress in software updates and sup- port. Accordingly, despite the steep ascent
of Oracle’s cloud offerings, our revenue call is now $37.5 billion, down $500 million. Meanwhile, we have also reduced our earnings target, with our non-GAAP es- timate now at $2.63 a share, versus the previous $2.83. When completed, the ac- quisition of NetSuite should be accretive. The transition to cloud computing remains front and center at Oracle. Billings for cloud offerings SaaS and PaaS are advancing rapidly, with profit margins widening on a sequential basis. In addi- tion, Oracle will be placing more emphasis on its infrastructure-as-a-service (IaaS) business, leveraging the offering with its strong position in the enterprise database arena and the services that can be pro- vided as a result. Amazon Web Services and Microsoft are keen competitors in this arena, and both are also trying to estab- lish some level of differentiation in what is basically a commodity-type business. Add- ing it all up, Oracle should prosper as the secular move to cloud architecture and computing unfolds. Accordingly, these shares should provide respectable risk- adjusted returns for patient accounts. Charles Clark November 11, 2016
LEGENDS 13.0 x ″Cash Flow″ p sh. . . . Relative Price Strength
Options: Yes Shaded area indicates recession
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