Oracle Corporation (NYSE: ORCL) has reported the adjusted earnings per share of 69 cents in the third quarter of 2017, beating the analysts’ estimates for the adjusted earnings per share of 62 cents. As a result, the stock rallied over 6.5% in the pre-market session today as of March 16th, 2017 (as of 8:24AM EDT ; Source: Google finance). The company had reported the adjusted revenue growth of 2.1 percent to $9.21 billion in the third quarter.
Oracle Corporation has posted gains in its businesses of selling access to applications in the third quarter, known as software as a service, and selling access to tools to manage apps as well as analyze data, called platform as a service. Combined, ORCL’s sales in those markets grew 73% to $1.01 billion.
Oracle Corporation is aggressively building its infrastructure-as-a-service business, the market is pioneered and dominated by Amazon.com Inc., though Microsoft Corp. and Alphabet Inc. are growing into legitimate rivals. ORCL has made continued progress in cloud computing, but as it continues to set its sights on Amazon.com as its biggest growth area, its future profit margins could take back. ORCL’s cloud infrastructure as a service revenue was $178 million in the quarter, up 19% from last year, compared with Amazon’s growth of 47% to $3.5 billion in revenue in its most recent quarter.
Oracle Corporation is investing in the massive data centers required to handle customers’ computing operations in the cloud. In the third quarter, Oracle Corporation has spent $1.68 billion on capital expenditures, up from $1.61 billion a year earlier. Therefore the operating margins fall to 32%, compared with 34% a year ago.
Oracle Corporation had acquired NetSuite for $9.3 billion in the second half of 2016, which was the company’s largest acquisition since it bought PeopleSoft for $10.3 billion in 2005. This will be the first full quarter that ORCL’s earnings include recent acquisition NetSuite’s results, which sells enterprise resource planning, or ERP, software. The acquisition could help ORCL to strengthen its competitive position against other cloud-based companies like Salesforce. ORCL has also purchased Apiary (a developer of API technologies) and Dyn (which manages core web systems).
Oracle Corporation has announced a 27% increase in the quarterly dividend. ORCL stock will pay out 19 cents per share on April 26th, 2017 to shareholders of record as of the close of business on April 12th, 2017.
Oracle Corporation stock has risen 10.53% in a year (source: Google Finance). According to tipranks.com, 14 analysts has covered the stock while recommend a “Moderate Buy”. ORCL has an average price target of $46.45, which is a further upside of 7.9%.