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Oracle’s Value Proposition in the Software Space

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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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