Oracle Corporation (ORCL) & Hewlett-Packard Company (HPQ): What Technology Business Is Good for Us to Buy Now?

Page 1 of 2

Oracle CorporationRecently, Barron’s featured six stocks which could experience a 100% increase in their share prices in the next five years. Indeed, a 100% return in five years would give investors quite a decent annualized return of 15% per year. In the list of six stocks, there are two technology giants: Oracle Corporation (NASDAQ:ORCL) and Hewlett-Packard Company (NYSE:HPQ). While Hewlett-Packard Company (NYSE:HPQ) has enjoyed a whopping gain of 74% since the beginning of the year, Oracle has had a sluggish negative return of -7.8%. Let’s take a closer look to see whether or not investors should come in on Oracle and Hewlett-Packard Company (NYSE:HPQ) at their current trading prices.

Oracle returned a lot of cash to its shareholders

Investors are feeling bearish about Oracle Corporation (NASDAQ:ORCL), sending its share price down 9% to only $30.30 per share within only one trading day. The market reacted negatively to Oracle’s share price after the company reported its sluggish fourth quarter performance. Its revenue was flat compared to the revenue in the fourth quarter of last year, coming in at $10.95 billion which was lower than analysts’ estimates of $11.12 billion. However, Oracle has managed to increase its bottom line by 10% to $3.8 billion, or $0.80 per share.

For the full year 2013, its revenue also stayed flat at around $37.18 billion while the net income grew a bit, from $9.98 billion last year to more than $10.9 billion. Its diluted earnings per share rose from $1.96 to $2.26 during the same period. Safra Catz, the Oracle Corporation (NASDAQ:ORCL) resident and CFO, felt positive about its operating performance. Catz mentioned that with a high non-GAAP operating margin at 47% for the full year, Oracle had managed to generate more than $14 billion in operating cash flow and increase the its cash level to $32 billion. She also said that the company had returned nearly 90% of its cash flow to shareholders via both dividends and share repurchases.

Oracle has been quite active in expanding its footprint in the cloud business. Oracle Corporation (NASDAQ:ORCL) acquired Eloqua, a web-based on-demand revenue performance management for improved revenue predictability, for around $870 million at the end of last year. One of its direct peers in cloud computing services, salesforce.com, inc. (NYSE:CRM), also grew its cloud business by spending around $2.5 billion to acquire ExactTarget, a cloud-based digital marketing company. Salesforce mentioned that this acquisition will establish a marketing platform across different channels including email, mobile, social and the web.

Salesforce’s and Oracle’s partnership in cloud computing

To become much stronger players in the cloud, both companies should shake hands with each other. Interestingly, just a few days ago, Salesforce and Oracle Corporation (NASDAQ:ORCL) announced a nine-year partnership in three main cloud computing areas: Applications, Platform and Infrastructure. Both companies realized that they needed to integrate their clouds with each other. Larry Ellison, Oracle’s CEO, said

When customers choose cloud applications they expect rapid low-cost implementations; they also expect application integrations to work right out of the box – even when the applications are from different vendors. That’s why Marc (Salesforce’s Chairman and CEO) and I believe it’s important that our two companies work together to make it happen, and integrate the salesforce.com, inc. (NYSE:CRM) and Oracle clouds.

At $30.70 per share, Oracle Corporation (NASDAQ:ORCL) is worth around $143.90 billion. The market values Oracle 7.4 times its trailing EBITDA (earnings before interest, taxes, depreciation, and amortization) and 3.84 times its sales. Salesforce, on the other hand, has a much higher valuation. At $38.20 per share, it is worth more than $22.5 billion on the market. The market values Salesforce at nearly 7.1 times its sales and more than 300 times its trailing EBITDA.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!