Why Oracle’s Earnings Could Continue to Rise



Oracle’s earnings

Oracle (ORCL) has been delivering better-than-expected earnings for the past ten consecutive quarters. Its EPS of $1.16 in the fourth quarter of fiscal 2019 topped analysts’ estimate by 8.4% and beat its fiscal 2018 fourth-quarter EPS by 22.1%.

In comparison, Symantec’s (SYMC) EPS of $0.39 fell ~11.4% YoY (year-over-year) in the fourth quarter. Microsoft’s (MSFT) EPS of $1.14 rose 20% YoY in the third quarter of fiscal 2019.

EPS to continue to grow

We expect the Oracle’s earnings to continue to improve in the coming quarters on the back of improving margins and share buybacks. The company’s cloud business also has a higher margin and will add to this margin in the coming quarters. We expect the company to continue its trend of buying back shares, which will lower its share count and thereby boost its earnings. However, adverse currency rates are likely to drag on its profits in the coming quarters.

Oracle continues to expect currency headwinds to hurt its earnings in the upcoming quarter. Including currency, Oracle expects the company to deliver adjusted EPS in the range of $0.80–$0.82 in the first quarter of fiscal 2020. The company expects double-digit earnings growth on a constant-currency basis in fiscal 2020.

What analysts expect

Wall Street analysts expect Oracle’s earnings to rise 13.6% YoY in the first quarter. This projected growth rate reflects a sequential slowdown from 22.1% in the fourth quarter of fiscal 2019. Analysts expect the company’s earnings to rise 10.2% in fiscal 2020.

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