Oracle Corporation (ORCL), International Business Machines Corp. (IBM): Get Bullish on This Tech Giant

The highest operating margin business with the lowest valuation

At around $31 per share, Oracle Corporation (NASDAQ:ORCL) is worth around $148 billion on the market. The market values Oracle at only 7.78 times EV/EBITDA. Compared to its other tech peers, including International Business Machines Corp. (NYSE:IBM) and SAP AG (ADR) (NYSE:SAP), Oracle is valued the cheapest. SAP, at around $80 per share, has a total market capitalization of $95 billion. It has the most expensive valuation among the three, at nearly 15.6 times EV/EBITDA. IBM is the biggest company, with more than $235 billion in total market cap. At around $211 per share, International Business Machines Corp. (NYSE:IBM) is valued reasonably at 9.7 times EV/EBITDA.

Among the three, Oracle has the highest operating margin. Its operating margin, at around 40%, is nearly two times higher than that of International Business Machines Corp. (NYSE:IBM), while International Business Machines Corp. (NYSE:IBM) generates more than 21% operating margin. The operating margin of SAP is a bit higher at 25.1%. However, in terms of return on invested capital, IBM is a top-notch with nearly 31.4% ROIC, while the ROIC of Oracle and SAP are 16.7% and 19.3%.

My Foolish take

Oracle Corporation (NASDAQ:ORCL), after a significant drop, represents a good investment opportunity for investors due to its strong balance sheet, superb cash flow growth, and low valuation. Investors might feel more confident as Oracle is one of the top positions in Lou Simpson’s portfolio.

The article Get Bullish on This Tech Giant originally appeared on Fool.com and is written by Anh Hoang.

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