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Oracle (ORCL) to Report Q4 Earnings: What's in Store?
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Oracle Corp. (ORCL - Free Report) is set to report fourth-quarter fiscal 2016 results on Jun 16.
Last quarter, it had posted a 1.72% positive surprise. The company, however, has posted an average negative earnings surprise of 0.61% over the past four quarters.
Let’s see how things are shaping up for this announcement.
Oracle, which already enjoys a leading position in the enterprise software and database management system (DBMS) software market, has also been gaining ground on its cloud endeavors. Specifically, the company’s offerings in SaaS, PaaS and Big Data divisions have gained significant momentum in the past few quarters.
In the fourth quarter, there were a number of developments in Oracle’s business- both cloud and database related. The company introduced some novel cloud solutions in March to enable it to help organizations in transitioning their operations from on-premise to cloud. In addition, it launched VSM 7, a data protection solution for main frame and heterogeneous systems that will enable systems to seamlessly tier with public cloud. We expect the company’s top line to benefit from these new offerings in the to-be-reported quarter.
Apart from this, Oracle also joined forces with General Electric (GE - Free Report) in order to co-develop a cutting edge platform that would enable the companies to digitally connect industrial assets across the world.
However, for the last few months, the company has been entangled in one lawsuit after another, which remains an overhang on its financials. In May, Oracle lost its six-year old lawsuit against Alphabet (GOOGL - Free Report) . This apart, the company is still undergoing a transition from licensing, to cloud subscription model, which will have some negative impact on its revenue growth in the near term.
For the fourth quarter, total revenue is expected to be down 2% to up 1%. Non-GAAP earnings per share are expected in the range of 82 cents to 85 cents.
Earnings Whispers
Our proven model does not conclusively show that Oracle is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Oracle currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 76 cents.
Zacks Rank: Oracle has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
The following stock can be considered at the moment, as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release:
Constellation Brands Inc. (STZ - Free Report) which has an Earnings ESP of +1.97% and a Zacks Rank #3.
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Oracle (ORCL) to Report Q4 Earnings: What's in Store?
Oracle Corp. (ORCL - Free Report) is set to report fourth-quarter fiscal 2016 results on Jun 16.
Last quarter, it had posted a 1.72% positive surprise. The company, however, has posted an average negative earnings surprise of 0.61% over the past four quarters.
Let’s see how things are shaping up for this announcement.
ORACLE CORP Price and EPS Surprise
ORACLE CORP Price and EPS Surprise | ORACLE CORP Quote
Factors to Consider
Oracle, which already enjoys a leading position in the enterprise software and database management system (DBMS) software market, has also been gaining ground on its cloud endeavors. Specifically, the company’s offerings in SaaS, PaaS and Big Data divisions have gained significant momentum in the past few quarters.
In the fourth quarter, there were a number of developments in Oracle’s business- both cloud and database related. The company introduced some novel cloud solutions in March to enable it to help organizations in transitioning their operations from on-premise to cloud. In addition, it launched VSM 7, a data protection solution for main frame and heterogeneous systems that will enable systems to seamlessly tier with public cloud. We expect the company’s top line to benefit from these new offerings in the to-be-reported quarter.
Apart from this, Oracle also joined forces with General Electric (GE - Free Report) in order to co-develop a cutting edge platform that would enable the companies to digitally connect industrial assets across the world.
However, for the last few months, the company has been entangled in one lawsuit after another, which remains an overhang on its financials. In May, Oracle lost its six-year old lawsuit against Alphabet (GOOGL - Free Report) . This apart, the company is still undergoing a transition from licensing, to cloud subscription model, which will have some negative impact on its revenue growth in the near term.
For the fourth quarter, total revenue is expected to be down 2% to up 1%. Non-GAAP earnings per share are expected in the range of 82 cents to 85 cents.
Earnings Whispers
Our proven model does not conclusively show that Oracle is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Oracle currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 76 cents.
Zacks Rank: Oracle has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
The following stock can be considered at the moment, as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release:
Constellation Brands Inc. (STZ - Free Report) which has an Earnings ESP of +1.97% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>