20 Mar

The 90’s Called. They Want to Know Why You Are Buying Oracle.


Oracle’s shiny 90’s buildings

The 90’s Called.  They Want to Know Why You Are Buying Oracle.

Really?  Larry Ellison: yacht racing and a $50 million Japanese-style house.  Sweet.  But is the stock really a buy now?  Sure they bought Netsuite so Netsuite would stock eating their lunch.  And sure they are a cloud company now.  But it seems to me like the bulk of what they do is still databases and ERP – maybe tools too.  And Netsuite did have high 30’s growth, but still.  I would much rather own MongoDB (MDB) for database growth.  Let’s take a look at the revenue growth.

2016: 0%

2017: 5%

2018: 1%

2019e: 0%

2020e: 2%

2021e: 2%

And right now you get to pay 4.6 times revenue for that.  Over the last 10 years, that multiple has range from 3.2 times to 5.3 times – so you are closer to the top than the bottom.  And sure Oracle (ORCL) can manufacture 10% EPS growth this year (dropping to 6% next year), but for how long?

The stock is overbought on an RSI basis and recently completed a Wave indicating the end of a trend.  The stock is up 18.3% this year, besting the Nasdaq (QQQ) by almost 2.5%.

The dividend yield is only 1.8%.

Look, who knows what will happen with Oracle or with the economy?  But it seems pretty pricey with this global economic backdrop.

Here are some things from the 90’s I would like more than Oracle’s stock: grunge, a Roxette album, a Blockbuster video card, a Sony Walkman, and a Nintendo Gameboy – just sayin’.

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