After the closing bell yesterday, software giant Oracle (ORCL - Free Report) reported fiscal first-quarter 2019 results. While the company beat the Zacks Consensus Estimate for earnings, it lagged on revenues and disappointed investors with a bleak outlook.
Oracle Q1 Earnings in Focus
Earnings per share came in at 71 cents, three cents ahead of the Zacks Consensus Estimate and up 18% year over year. Revenues inched up 1% year over year to $9.20 billion but were below the estimated $9.28 billion (see: all the Technology ETFs here).
Revenues from Cloud services and license support rose just 3% to $6.6 billion and accounted for 72% of total revenues.
For the fiscal second quarter, the world’s second-largest software maker expects total revenues to grow 0-2% on a constant currency basis, below the Zacks Consensus Estimate of 2.35% growth. Further, the company expects earnings per share of 78-80 cents; the mid-point is also below the Zacks Consensus Estimate of 80 cents, reflecting some concerns in the company’s future growth.
Revenue miss and disappointing outlook pushed shares of Oracle down as much as nearly 5% in aftermarket trade with elevated volumes. Currently, the stock has a Zacks Rank #4 (Sell) and a VGM Score of C. It belongs to the top-ranked Zacks Industry (top 20%).
ETFs in Focus
ETFs with the highest allocation to this software giant look to be big movers this week and in the next, as investors digest its scores and views. They should closely monitor the movement in these funds and grab any opportunity from a surge in the price of ORCL or avoid if the stocks drag them down:
iShares North American Tech-Software ETF (IGV - Free Report)
This ETF provides exposure to the software segment of the broader U.S. technology space by tracking the S&P North American Technology-Software Index. The fund holds a basket of 64 securities with Oracle taking the fourth spot at 7.96% of total assets. It is popular with AUM of $2.2 billion and volume is good as it exchanges nearly 305,000 shares a day. The product charges 47 bps in annual fees and has a Zacks ETF Rank #2 (Buy), with a High risk outlook (read: Forget FAANGs, Focus on Software ETFs).
Innovation Shares NextGen Protocol ETF (KOIN - Free Report)
This product follows the Innovation Labs Blockchain Innovators Index, which measures the performance of a diversified group of publicly-listed companies that use, or are involved in, blockchain. Holding 48 stocks in its portfolio, ORCL is the eight firm with 4.5% share. The ETF has the largest allocation to software and services at 45%, while semiconductors and diversified financials round off the next two spots. It has accumulated $8 million in its asset base since its debut in late January and trades in average daily volume of 7,000 shares. Expense ratio comes in at 0.65%.
First Trust Cloud Computing ETF (SKYY - Free Report)
This fund provides exposure to cloud computing securities by tracking the ISE Cloud Computing Index. Holding about 30 stocks in the basket, Oracles takes the twelfth spot at 4.3% of assets. The product has been able to manage $2 billion in its asset base while sees a good volume of about 233,000 shares a day. It has 0.60% in expense ratio and a Zacks ETF Rank #2, with a Medium risk outlook.
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $936.5 million in its asset base and trades in moderate volume of about 72,000 shares per day. The ETF charges 50 bps in annual fees and holds about 94 securities in its basket. Of these firms, CSCO occupies the seventh position, making up roughly 3.9% of the assets (read: 5 Dividend ETFs Worth Buying Now).
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