Oracle Earnings Preview: Long-Term Growth Trend Is Key

Last quarter, Oracle’s (ORCL) financial performance strengthened QoQ and YoY to the annual QE May cyclical high. This quarter, the QE August, performance is projected to slow significantly QoQ but increase YoY. The YoY growth in earnings per share (GAAP and Non-GAAP) will be the key. The EPS GAAP +11.3% YoY is the benchmark, the acceptable minimum to remain enthused about ORCL stock on a fundamental basis.

GAAP earnings per share year over year has been impressive at +11.3%, +19.5%, +16.2%, and +33.3% the past four quarters but the trend has been downwards. The prior quarter was +11.3% and a trend reversal and upswing above that would encourage investors.

The long-term trend is clearly upwards as evidenced by the GAAP EPS chart below as each May peak is higher YoY and to a lesser extent for total revenues. The biggest performance concern is the flat to decreasing YoY growth rates in total revenues and slowing YoY growth rates in earnings per share. The biggest financial position negative has been the debt. This was at 21% of total assets, down from a peak of 26% for the QE August 2010. Financial position continues acceptable with adequate capital, moderate debt, and reasonable liquidity.

Estimated QE August 2012 Total Revenues (GAAP and Non-GAAP)
Yahoo Finance Estimates: $8.43B avg, $8.26B low, $8.81B high, 37 analysts
Prior Quarter: $10.92B = -22.8% QoQ
Prior Year: $8.37B = +0.72% YoY
Outlook: none provided

Estimated QE August 2012 Earnings per Share (Non-GAAP)
Yahoo Finance Estimates: $0.53 avg, $0.48 low, $0.55 high, 40 analysts
Prior Quarter: $0.82 = -35.4% QoQ
Prior Year: $0.48 = +10.4% YoY
Outlook: $0.51 to $0.55

Oracle Outlook QE August 2012 Oracle estimates QE August 2012 Non-GAAP EPS of $0.51 to $0.55 and analysts project the midpoint $0.53. This would be an significant -35% decrease QoQ, as expected, but a +10% increase YoY. Oracle projects revenues YoY from -2% to +1%. Analysts project $8.43 billion, which would be a -23% QoQ and +0.72% YoY.

Prior Quarter: Oracle Reports Strong Quarter at Annual Cyclical Peak