Oracle Give Investors a Short-Term Scare

Oracle

Good quarterly results don’t always translate into good stock market performance. Oracle (NYSE:ORCL) recently demonstrated this principle; its Q1 2022 results were solid, but – in light of high analyst expectations – they weren’t good enough for the market. Oracle is the world’s number 1 provider of business software. The group sells licenses, software for databases, application management and hardware.

Its products and intellectual properties include the Java programming language, Oracle Database (which has the largest market share of any database software) and the Fusion Middleware software interface system. The quarterly results presented after the close on Monday evening were impressive at first glance. Revenues increased by around 4% to $9.7 billion. Net profit was even better, increasing by 9% to $2.5 billion.

Shares Slip For Now

But these figures did not provide the share price boost the company was hoping for. On the contrary, investors obviously expected even better figures and reacted with selling, which pushed shares significantly into the red both immediately after the announcement and again yesterday. 

Although Oracle’s earnings exceeded analyst expectations, its sales came up short. The selling action also dragged down Oracle’s competitors, like SAP (NYSE:SAP), even though that firm hasn’t yet released results for the current quarter.

A Bigger Trend? 

Now investors are hoping that these results do not set a trend for the coming weeks. In just a few days, earnings season will be upon us – and many analysts and investors have set their expectations for this quarter quite high. 

If the actual figures disappoint, many more companies will likely suffer the same kind of selloff as Oracle. 

A Favorable Valuation

With Oracle, however, shareholders can now breathe easy for the future. The price-to-earnings ratio (P/E) is around 22 for this year and next, making this stock quite favorably valued.

Even though the share price fell yesterday, shareholders are still enjoying a gain of almost 40% so far this year. And the company  is set for growth in the future as well. 

With pandemic-era remote work arrangements being phased out, numerous companies will certainly invest in upgrading their IT. And it is precisely from this trend that Oracle, due to its core businesses, could profit.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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