Saturday, July 07, 2007

Oracle Corp.

Description - Oracle Corporation, an enterprise software company, engages in the development, manufacture, distribution, servicing, and marketing of database, middleware, and application software.

Competitors - IBM, MSFT , CA, SAP

Financials 2005 2006 2007

Total Revenue $11,799,000,000 , $14,380,000,000, $17,996,000,000
Net Income $ 2,886,000,000, $ 3,381,000,000 $ 4,274,000,000

Net Income has grown by an average of 21% the last few years. The recent quarter saw a 23% rise in net income. Oracle has been on an acquisition binge over the last few years acquiring over 30 companies . It appears these acquisitions are paying of financially based on the solid top and bottom line growth. ORCL is trading at a forward P/E of less than 18 and a trailing P/E of 25 . Considering the solid earnings growth, ORCL justifies a P/E of 30 or even 35 especially, when you compare it to competitors and other tech giants such as IBM MSFT SAP CSCO INTC that trade at similar multiples yet, have not displayed the same type of earnings growth.

Technically, ORCL has been range bound the last few years between $10-15 before finally breaking out above $15 last year and trading in a $15-20 range. The current breakout above $20 is very positive from a technical standpoint. Provided the overall markets hold up, I think ORCL has a good chance of making a run to $30 by years end. Support is around the breakout point of $19.75 and the 50 day moving average and uptrend line round $18.

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