Oracle Corporation (ORCL): Is It a Good Investment?

Page 1 of 2

Oracle Corporation (NASDAQ:ORCL) is a giant in the enterprise software and database management industry. Oracle also has one of the leading positions in the quickly growing enterprise application marketplace. Research firm Gartner expects the enterprise resource planning industry to reach a size of $25 billion by the end of this year. Other drivers for Oracle will be increased spending on cloud computing and software-as-a-service markets, where global SaaS industry revenues are expected to be up 18% this year, and grow from $14 billion in 2012 to $22 billion in 2015.

Ken Fisher FISHER ASSET MANAGEMENT

Oracle has seen weakness in its hardware segment, but this has only marginally hurt the tech company given its diverse product portfolio. Future growth is expected to come from cloud computing systems, where Oracle has advantages over top rivals such as IBM and SAP. A focus on the cloud computing industry will only help fuel Oracle’s industry-leading position when it comes to high-margin products. Oracle’s EBITDA margin is upwards of 46%, where key competitors Cognizant and Adobe are at only 24% and 34%, respectively.

Oracle also remains proactive when it comes to acquisitions. Over the last ten years, the tech giant has shelled out more than $40 billion to acquire 80 companies, including Sun Microsystems. The Sun acquisition is expected to ultimately be the biggest long-term positive, as Oracle is now able to cross-sell its already robust software portfolio with its newly acquired hardware business.

From a valuation standpoint, Oracle is the cheapest when compared to major peers on a forward P/E basis at 11x. This is also below the tech company’s long-term historical P/E of 15x. Billionaire Ken Fisher – founder of Fisher Asset Management and long-time Forbes columnist – is Oracle’s top fund owner (check out Fisher’s newest picks).

Microsoft Corporation (NASDAQ:MSFT) is another tech company with a penchant for product diversification. This tech giant pays the highest dividend of Oracle’s peers at 3.4% with a payout ratio that is only 37%. Microsoft is a hedge fund favorite given its history of solid dividend increases, but it also has a portfolio that could present growth opportunities, including its Surface tablet, latest Windows OS and Office Suite. Microsoft is also one of the cheapest stocks in the industry at an 8x forward P/E. David Einhorn was one of the many billionaires owning Microsoft last quarter (see Einhorn’s new bets).

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

The 10 Biggest Airports in the World

The 5 Most Gang Infested Cities In America

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

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!