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Saturday, May 28, 2022

Oracle Corporation [ORCL] Earnings Preview: What to Expect From Earnings

After the close of Tuesday’s trading, Oracle Corporation (NYSE: ORCL) announced its fourth quarter and fiscal year 2021, which ends May 31. Quarterly earnings per share and earnings were better than analysts’ estimates and announced quarterly dividends. Oracle’s fiscal year-end sales were up by 3.6% from the previous year.


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Despite this, Oracle is still having difficulty competing in the cloud computing market. Even though billions of dollars have been invested in the company, sales have decreased fourfold in the last six years. Analysts and investors generally agree that Oracle was late to reorient its business towards cloud technology and remains a niche player in comparison to companies such as Amazon (AMZN), Microsoft (MSFT), or Google from Alphabet (GOOG, GOOGL). According to Scott Kressler, an analyst at Third Bridge, Oracle still has a long way to go before it can compete with the leading cloud infrastructure companies. “One of Oracle’s concerns is how little revenue growth it has seen despite its shift toward cloud solutions,” said a Third Bridge analyst.

Additionally, Oracle Corporation’s (NYSE: ORCL) stock has risen 26.2% since the beginning of 2021, exceeding the 20.4% growth recorded in the entire year of 2020. Oracle will likely need to show a more substantial revenue growth rate to rise further than the 2-8% in the last fiscal year. Oracle reported earnings per share of $ 1.54 in the 4th quarter of 2021, up 28% from last year and beating analyst forecasts of $ 1.31. Revenue for the 4th quarter has increased 8% to $11.23 billion, beating the Wall Street average of $ 11.04 billion. In its most recent fiscal year, Oracle reported sales of $40.48 billion, an increase of 3.6% over the previous year. Oracle’s board has declared a quarterly dividend of $0.32 per share. The dividend will be paid on July 29 to shareholders whose accounts were established before July 15.

According to Oracle CEO Safra Katz, the company will nearly double its investments in data centers and cloud services in fiscal 2022 to $4 billion. Furthermore, revenue growth is expected to be between 3-5% for the first quarter of 2022, and sales growth will exceed 3.6% for the entire year. Oracle’s earnings per share in the first quarter are expected to range between $0.94 and $0.98, below analysts’ average expectations of $1.03. However, long-term investors must realize that Oracle is now taking the same path the current cloud giants took.

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