Can Oracle Corporation (ORCL) Hold Its Momentum? – Acme Packet, Inc. (APKT)

Great expectations
We can make all of the predictions we want about earnings. Whether Oracle beats estimates or produces results that arrives in line with expectations, everything will still hinge on how the company guides for the rest of the year and possibly fiscal 2014. I say this to caution investors to not be so focused on what it reports this quarter.

Management guided for Q3 earnings per share of $0.64 to $0.68 — slightly higher than $0.62 per share earned a year ago. Revenue growth is projected to come in the area of 1% to 5% — ranging from $9.1 billion to $9.5 billion. Although these are not breathtaking projections, investors have to keep in mind that Oracle Corporation (NASDAQ:ORCL) has not posted historically strong seasonal Q3 numbers.

Besides, as I’ve I said, this is a story about where the company is heading. In that regard, it’s worth noting that Oracle historically has a seasonally strong fourth quarter, which is why guidance will be so important. Not only did the stock rise more than 5% following the fiscal Q4 2012 results, but as noted, that was when the shares began its run of more than 40%. A repeat performance would not surprise.

Stock is cheap
Even though shares are currently at their 52-week high, I believe the stock’s still cheap. At $36 per share, the stock is trading at just 13-times forward earnings estimates for fiscal 2013 and, at only 12 times fiscal 2014 projections, below Oracle’s historical averages. At the very least, we can argue that the stock is trading in line with estimates. But given the advantages that recent acquisitions will present over Salesforce and IBM, I wouldn’t bet that these shares will remain discounted for very long.

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Fool contributor Richard Saintvilus has no position in any stocks mentioned. The Motley Fool recommends Acme Packet, Cisco Systems, and It owns shares of IBM and Oracle.

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