Oracle’s stock price performance
Shares of Oracle (ORCL) are up ~8% since the company reported impressive results for the fourth quarter fiscal 2019 (which ended in May) on June 19. The software and cloud services giant has been delivering consistent growth in earnings on the back of margin improvements and share buybacks. Its growing cloud business is adding to its top line growth. However, currency headwinds are suppressing the company’s earnings, revenues, and margins.
Oracle stock has risen nearly 26.8% year-to-date as of June 27, higher than the S&P 500, which is up 16.7% in the same period. In comparison, Oracle’s software peers Symantec (SYMC), IBM (IBM), and Microsoft (MSFT) are up ~11.9%, ~24.8%, and ~32.6%, respectively, in the same period.
Oracle’s growth drivers
We expect Oracle’s earnings to continue to grow in the upcoming quarter due to its improving margins and share buybacks despite currency pressures.
The company’s sales are likely to grow as it focuses on expanding its cloud-based software services, as many companies are shifting away from traditional on-premises database models to high-growth cloud computing platforms. Though Oracle is lagging behind other cloud services provided by platforms such as Amazon Web Services, Microsoft Azure, and Google Cloud, the company is expected to gain strength in its cloud applications business going forward.
Oracle’s recent partnership with Microsoft related to cloud computing services is also expected to help the company accelerate the transition from an on-premises database to an autonomous database service.