Should You Buy Oracle Stock Despite Soft Guidance?

Oracle’s guidance for the third quarter

Shares held steady despite the multinational’s guidance for profit falling slightly shy of Street estimates.

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For the current quarter, adjusted EPS ranged from $1.17 to $1.21 and analysts were expecting $1.23 per share. However, Daniel Morgan of the Synovus Foundation says Oracle Corp. is a good choice for stability in a challenging macroeconomic backdrop.

I expect Oracle to be well positioned in 2023. It trades at 15 times earnings, so its multiple is very low. They have a large install base, so their income is recurring, so they generate a lot of cash flow.

For the year, Oracle stock is down more than 5.0% on writedowns.

Oracle’s cloud revenue is growing rapidly

Earlier this year, Oracle spent about $28 billion on acquisitions Cerner Corporation – A health technology company. According to Morgan, that acquisition will also be significantly accretive to earnings.

According to the earnings report, cloud revenue was up 43% this quarter, and he expects that growth to continue. Talking to people in Yahoo Finance Morgan said:

The transition to Oracle’s leading role in the cloud space remains the same. It has more than 400,000 customers and only 35% have switched to using their cloud service products. Hence, there is a tremendous opportunity to transform the existing site.

Wall Street also has a consensus “Overweight” rating on Oracle shares.

Oracle reports strong second-quarter results

• Earned $1.74 billion, up from $1.24 billion a year earlier
• Earnings per share also rose to 63 cents from 46 cents
• Adjusted EPS came in at $1.21 Press release
• Revenue grew 18% year-over-year to $12.28 billion
• The consensus was $1.17 in adjusted EPS on sales of $11.96 billion