Oracle Corporation (NYSE:ORCL) has the lowest valuation of the trio. It is trading at $32.20 per share, with the total market cap of $149 billion. The market values Oracle at around 10.2 times its forward earnings.
In the recent fourth quarter earnings results, Oracle Corporation (NYSE:ORCL) was hit hard in the hardware business with a decline of 9%. However, its software business revenue increased 4%.
For the full year, the company has generated $14 billion in operating cash flow, increasing its cash position to as much as $32 billion. Looking forward, Oracle plans to return around $12 billion in cash to shareholders in a form of share repurchases, creating a total yield of 9.55% (1.5% dividend yield and 8% buyback yield) for shareholders.
Both IBM and Oracle are global leaders in IT service industry, serving a diverse customer base. When I talk to a lot of people in the IT field, I realize that both companies have quite a high level of customer loyalty. Their customers tend to be quite sticky after they use IBM or Oracle software/systems. The customers’ loyalty will provide sustainable recurring revenues for both companies in the future.
My Foolish take
Investors might get excited about International Business Machines Corp. (NYSE:IBM)’s plan to return cash to shareholders. Personally, I like both IBM and Oracle with their global leading positions in the technology industry, high customer loyalty and the high potential yield coming from their potential cash returns to shareholders.
The article Juicy Potential Yield From IBM originally appeared on Fool.com and is written by Anh Hoang.
Anh HOANG owns shares of Oracle. The Motley Fool recommends Accenture. The Motley Fool owns shares of International Business Machines. and Oracle. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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