Guilfoyle: Oracle Shouldn’t Bounce Soon
Oracle (ORCL) – Get the Oracle Corporation report, the software and cloud giant, faces hurdles driving further growth.
The company recently released its financial results for the first fiscal quarter, which fell short of Wall Street expectations. Oracle reported adjusted earnings per share (EPS) of $ 1.03 and GAAP EPS of $ 0.86 and “the best earnings expectations by either measure,” wrote Stephen “Sarge” Guifoyle in a recent Real Money Pro column.
The catch is, it hasn’t met Wall Street’s revenue expectations. Oracle said revenue of $ 9.73 billion, which is a decent level of growth of 3.8%, but is lower than Wall Street forecast.
Sluggish growth is expected to continue in the second quarter with revenue growth estimates of 3% to 5%. The outlook for the second quarter is EPS of $ 1.09 to $ 1.13, a little above Wall Street levels. Given that revenue growth is not expected to exceed 5%, which matches Wall Street’s 5% forecast, these numbers are “something of a disappointment compounding the just-reported revenue figure that was also disappointing, ”wrote Guilfoyle.
Oracle’s record “that its cash and cash equivalents are” down considerably over the past three months, as are total current assets, “since the company repurchased its common stock, Guilfoyle wrote.
Investors should put their money elsewhere, Guilfoyle argues, because Oracle’s stock price is not expected to rebound anytime soon. All technical indicators are weak, including the RSI, the daily MACD and the full stochastic oscillator, he wrote.
“What you have here now is a weak opening that created a gap, where the stock feels close to mid-July lows for support,” Guilfoyle wrote. “The investor can, in my opinion, find something better to do with their money. Revenue growth has been slow, and the company has told you emphatically to expect the same for the current quarter. If you love Oracle, you don’t have to hurry. It’s not about to take off.
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