Wednesday, September 21, 2011

Oracle Corp. Q1 FY 2011 - 2012 Result and Valuation Analysis

Oracle Headquarter
Oracle Corp has reported a 36% jump in net income to $1.8 billion for the three-month period ended August 31, 2011, on account of strong sales from its core software business.

In the year-ago period, the company had registered a net income of $1.35 billion. 
The company's total revenues were up 12% vs. the year-ago period to $8.4 billion in Q1. The EPS of the company stood at 36 cents in the first quarter of FY12, up 34% compared to last year.

Oracle Corp. Valuation:

Based on trailing 12 months EPS of $1.8 USD the stock, at the current market price of $28.35 USD as on 20th Sep 2011, is available at a PE multiple of 15.75 times.

Based on current quarter run rate the company could do an EPS of $1.44 USD in FY-12 which discount the current market price by approximately 20 time. The PE multiple of 20 times based on forward year EPS appears a bit expensive, considering the global economic headwinds.

The 52 week range for the stock is 36.50 - 24.72

Oracle Corp Technical Chart:

Oracle Corp Technical Chart
The stock was in upward trending channel since second half of 2009 which got broken in May this year and the stock corrected sharply from the highs of $ 36.5 levels to $26 levels in the matter of 3 months.

Below $26 the stock could correct to $22 where it might find some kind of support.

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