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Oracle’s Value Proposition in the Software Space


Oct. 2 2017, Updated 1:06 p.m. ET

Oracle’s scale in the software space

So far in this series, we’ve discussed Oracle’s (ORCL) fiscal 1Q18 earnings results as well as the company’s consistent foray into the rapidly growing and competitive cloud space. We also discussed Oracle stock’s technical indicators and compared them with its peers.

On September 19, 2017, Microsoft (MSFT), with a market cap of close to $580 billion, maintained its position as the world’s largest enterprise software player by market capitalization. It is followed by Oracle, IBM (IBM), and Germany-based (EWG) SAP AG (SAP).

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Oracle’s valuation multiples

Let’s take a comprehensive look at Oracle’s value and move from Oracle’s market cap to its EV-to-EBITDA multiple. This ratio assists investors who are looking for prospective undervalued investing opportunities in a particular sector or industry.

Oracle stock was trading at a forward EV-to-EBITDA multiple of ~9.3x on September 19, 2017. This metric was lower than Microsoft’s multiple of ~12.0x. In comparison, IBM’s and SAP’s multiples stood at ~8.5x and ~14.1x, respectively, on the same date.

Oracle’s dividend yield

Oracle’s forward annual dividend yield was ~1.6% on September 19, which was lower than Microsoft’s and IBM’s forward dividend yields of ~2.1% and ~4.2%, respectively, on the same date. SAP’s dividend yield was ~1.3%.

In the final part of this series, we’ll discuss analyst recommendations for Oracle stock.


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