Oracle Corporation (ORCL): What This IT Bellwether’s Results Mean to the Market?

Where next for Oracle?

The positives in this report were that the transition to new hardware product systems is going a bit better than expected and the US and Europe are doing okay. In a sense it is another story of current macro weakness amidst ongoing change in Oracle’s business as it shifts to cloud based solutions and new hardware products.

In the last quarter it made sense to pick up some Oracle stock after disappointing results and I wouldn’t be surprised if the same applies this time too. The stock trades on an enterprise value to EBITDA multiple of just 7.4 and generates huge amounts of cash flow that currently represent over 10% of its enterprise value. On a value basis the stock looks cheap and I wouldn’t be surprised to see Oracle increasing its returns to shareholders in future. It looks a good long term hold but be prepared for volatility as the tech spending environment still looks a little weak this year.

Lee Samaha has no position in any stocks mentioned. The Motley Fool recommends Rackspace Hosting. The Motley Fool owns shares of International Business Machines (NYSE:IBM). and Oracle.

The article What This IT Bellwether’s Results Mean to the Market? originally appeared on Fool.com and is written by Lee Samaha.

Lee 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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