How Will Oracle (ORCL) Stock Be Affected By MICROS Systems (MCRS) Purchase?

NEW YORK (TheStreet) -- Oracle Corp. (ORCL) announced this morning that it has acquired MICROS Systems (MCRS), a company that provides integrated software and hardware solutions for the hospitality and retail industries, for $68 per share in a cash transaction valued at $5.3 billion.

By adding MICROS to its business, Oracle is able to extend its offerings in various industries by combining MICROS' industry specific applications with Oracle's business applications, technologies, and cloud portfolio, Oracle said.

The deal is expected to close during the second half of 2014.

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Shares of Oracle are up 0.51% to $41.03 in pre-market trading on Monday morning. Shares of MICROS are gaining 3.07% to $67.79 in pre-market trading today.

Separately, TheStreet Ratings team rates ORACLE CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate ORACLE CORP (ORCL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • ORACLE CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ORACLE CORP increased its bottom line by earning $2.39 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($3.18 versus $2.39).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Software industry. The net income has decreased by 4.2% when compared to the same quarter one year ago, dropping from $3,806.00 million to $3,646.00 million.
  • Net operating cash flow has declined marginally to $4,456.00 million or 2.36% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: ORCL Ratings Report
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