The company reported its fiscal first quarter financial performance recently, falling short of Wall Street’s expectations. Oracle reported adjusted earnings per share (EPS) of $1.03 and GAAP EPS of $0.86 and “bested earnings expectations by either metric,” wrote Stephen “Sarge” Guifoyle in a recent Real Money Pro Column.
The catch is that it failed to meet Wall Street’s revenue expectations. Oracle reported $9.73 billion in sales, which is a decent growth level of 3.8%, but fell below Wall Street’s predictions.
The lackluster growth is expected to continue in the second quarter with estimates of revenue growth of 3% to 5%. The outlook for the second quarter is EPS of $1.09 to $1.13, a bit above Wall Street’s levels. Since revenue growth is not projected to exceed 5%, which meets Wall Street’s prediction of 5%, these numbers are “something of a disappointment compounding the just reported revenue number that was also disappointing,” Guilfoyle wrote.
Oracle’s balance sheet “that its cash and cash equivalents are ”down considerably over the past three months, as are total current assets,” since the company repurchased its common stock, Guilfoyle wrote.
Investors should put their money elsewhere, Guilfoyle argues, since Oracle’s stock price is not likely to rebound soon. All the technical indicators are weak, including RSI, daily MACD and Full Stochastics Oscillator, he wrote.
“What you have here now is a weak opening that created a gap, where the stock is feeling around near the mid-July lows for support,” Guilfoyle wrote. “The investor can find, in my opinion, something better to do with their money. Revenue growth has been sluggish, and the firm has flat out told you to expect the same for the current quarter. If you like Oracle, you don't have to hurry. It's not about to take off.”