Foolish Forecast: Rolling With Oracle's Punches

Database giant Oracle (Nasdaq: ORCL  ) will report fourth-quarter and full-year earnings on Wednesday night. Check out what happened in the third quarter, then get back here for a fresh market update.

What Fools say:
Here's how Oracle's Motley Fool CAPS rating stacks up against some of its peers and competitors:

 

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Microsoft (Nasdaq: MSFT  )

$259.4

16.2

***

International Business Machines (NYSE: IBM  )

$169.5

16.1

***

Oracle

$114.6

22.9

****

SAP (NYSE: SAP  )

$61.9

21.6

***

CA (Nasdaq: CA  )

$12.3

25.8

**

Data taken from Motley Fool CAPS and Yahoo! Finance on June 24, 2008.

Four stars puts the company head and shoulders above its main competitors. Our players tend to like Oracle for its commanding share of the database market, and for its ability to push out price increases and upgrade cycles without sparking customer revolts.

What management does:
Keeping the margins as stable as Oracle has done, despite multiple massive acquisitions throwing potential spanners into the machinery, is quite an achievement. Come rain or shine, boom or economic bust, CEO Larry Ellison's troops simply march right on ahead with fresh revenue growth and steady efficiency.

Margins

11/06

2/07

5/07

8/07

11/07

2/08

Gross

76.6%

76.5%

76.7%

76.9%

77.2%

77.2%

Operating

33.7%

33.5%

34.1%

33.8%

34.2%

34.6%

Net

23%

23.3%

23.7%

23.5%

23.8%

24.2%

FCF/Revenue

27.3%

27.8%

28.9%

33%

32.8%

33.3%

Growth (YOY)

11/06

2/07

5/07

8/07

11/07

2/08

Revenue

24.7%

26.9%

25.1%

24.5%

24.9%

23.5%

Earnings

28.6%

27.9%

26.4%

25.8%

29.1%

28.2%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Next on the agenda for Oracle is digesting the acquisition of middleware specialist BEA Systems. Judging by past exploits, I don't expect any major disaster this time, either.

With a $115 billion market cap and the economies of scale that come with it, Oracle remains as safe a bet as you'll see in the technology sector. The stock is up more than 75% in the past three years, thoroughly stomping the S&P 500 benchmark's 11% return.

Microsoft is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days. Or just sign up for free access to CAPS to find out more from the Fools who were paraphrased above!

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.


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