Oracle Fulfills Its Annual Prophecy: Fool by Numbers

Recs

4

On June 26, software giant Oracle (Nasdaq: ORCL) released full-year 2007 earnings for the period ended May 31.

  • Stable margins and a modest stock buyback program helped Oracle preserve the revenue gains all through the income statement.
  • The company's penchant for growth by acquisition has reduced the cash balance and increased the debt load a bit. But the combined $1.1 billion hit doesn't hurt that much, considering that Oracle spent $5 billion on the year's mergers and acquisitions. Most of the funding came from the massive free cash flow.
  • Management aims for 20% growth in earnings per share every year, and easily met and beat that target in 2007.
  • Oracle has a Motley Fool CAPS rating of three stars (out of a potential five), while competitors Microsoft (Nasdaq: MSFT) and IBM (NYSE: IBM) carry two- and three-star ratings, respectively.

(Figures in millions, except per-share data)

Income Statement Highlights

FY 2007

FY 2006

Change

Sales

$17,996

$14,380

25.1%

Net Profit

$4,274

$3,381

26.4%

EPS

$0.81

$0.64

26.6%

Diluted Shares

5,269

5,287

(0.3%)

Get back to basics with the income statement.

Margin Checkup

FY 2007

FY 2006

Change*

Gross Margin

76.7%

77.5%

(0.8)

Operating Margin

33.2%

32.9%

0.3

Net Margin

23.8%

23.5%

0.2

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

FY 2007

FY 2006

Change

Cash + ST Invest.

$7,020

$7,605

(7.7%)

Accounts Rec.

$4,074

$3,022

34.8%

Liabilities

FY 2007

FY 2006

Change

Accounts Payable

$315

$268

17.5%

Long-Term Debt

$6,235

$5,735

8.7%

The balance sheet reflects the company's health.

Cash Flow Highlights

FY 2007

FY 2006

Change

Cash From Ops.

$5,520

$4,541

21.6%

Capital Expenditures

$319

$236

35.2%

Free Cash Flow

$5,201

$4,305

20.8%

Owner Earnings

$5,241

$4,173

25.6%

Free cash flow is a Fool's best friend.

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund had no position in any company mentioned. Microsoft is a Motley Fool Inside Value recommendation. Fool rules are here.

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