Oracle’s Value Proposition in the Software Space



Oracle’s scale in the software space

So far in this series, we’ve discussed Oracle’s (ORCL) upgrades to its offerings as well as the company’s consistent initiatives to make a mark in the cloud space. We also discussed Oracle stock’s technical indicators and compared them with its peers.

On September 9, 2017, Microsoft (MSFT), with a market cap of ~$570 billion, is the world’s largest enterprise software player by market capitalization. It is followed by Oracle, IBM (IBM), and SAP AG (SAP).

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Oracle’s valuation multiples

Oracle stock was trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of ~10.4x on September 9, 2017. This metric was lower than Microsoft’s multiple of ~11.8x.

In comparison, IBM’s and SAP’s multiples stood at ~10.8x and ~21.5x, respectively, on the same date.

Oracle’s dividend yield

Oracle’s forward annual dividend yield was ~1.5% on September 9, 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 ~1.5%.

You can consider investing in the SPDR S&P 500 ETF (SPY) (SPX) to gain exposure to the technology sector. The ETF has ~18.0% of its holdings in the technology sector.

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


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