Is Oracle Stock Still a Buy?

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Oracle stock - Is Oracle Stock Still a Buy?

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Oracle Corporation (NASDAQ:ORCL) hasn’t had a banner year so far.

While many of its tech compatriots have been killing it, especially chief rivals Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), ORCL has been comparatively treading water.

A lot of buzz around its big competitors comes from their cloud-based systems. AMZN and MSFT are the biggest — and some would argue the best — around. And they got a big head start on the rest of the pack, including ORCL and International Business Machines (NYSE:IBM). The cloud is changing and so is this major IT player.

But the transition for MSFT is different than its rivals in that its move into the cloud also means integrating all its software packages and licenses and hardware into a cloud-based model.

This is a challenge that other firms have not had to deal with, and it has dinged the stock in recent quarters as the company has begun the transition.

Oracle Stock Cloud Troubles

Recently, when Oracle stock announced its quarterly earnings, it also announced that it was no longer going to break out its cloud revenue by the various sectors. And the broader number was also woven into general revenue.

Investors saw this a way to cover up its weak cloud growth by lumping sales in with other non-cloud sales. This cynical view has some validity because its cloud revenue is not growing like its competitors and is even slowing based on its own past revenue.

There’s also the fact that AMZN announced that it was going to transition off ORCL products by 2020.

None of this helped Oracle stock.

However, after the initial reaction to this information, the stock has rebounded. This is likely due to the fact that revenue is revenue, and if ORCL is growing its user base, it’s not of much concern how it’s doing it. Whether customers are buying software or cloud solutions, the bottom line is still the bottom line.

And that’s the challenge Oracle stock is in the midst of right now — transitioning much of its business model from a software- and hardware-based license model to a fee-based licensing model.

Remember, Oracle stock has a $192 billion market cap. It’s not a small firm with a handful of clients. This is a big job. So, we’re catching ORCL is the midst of a corporate pivot. This is always a bit messy, if you recall years ago when MSFT did something similar.

But the big opportunity here has two parts. The first is, the stock isn’t trading at the sky-high premiums of other cloud players because it’s not posting the numbers right now.

And the second is, what many companies are now realizing is that putting all their eggs in one cloud provider’s basket is just as risky as not backing up corporate servers.

Many large companies that have successfully moved to the cloud are now looking for back-up cloud providers as a safety net for their data. This is a significant market that doesn’t get a lot of press but will become increasingly significant to firms like ORCL in coming quarters.

Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough StocksAccelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2018/08/is-oracle-stock-orcl-still-cloud-stock-to-buy/.

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