In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Oracle (NYSE:ORCL) alongside its primary competitors in the Software industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within the industry.
Oracle Background
Oracle provides database technology and enterprise resource planning, or ERP, software to enterprises around the world. Founded in 1977, Oracle pioneered the first commercial SQL-based relational database management system. Today, Oracle has 430,000 customers in 175 countries, supported by its base of 136,000 employees.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Oracle Corp | 43.19 | 42.94 | 8.81 | 30.01% | $5.44 | $9.4 | 6.86% |
| Microsoft Corp | 37.17 | 12.14 | 13.36 | 8.45% | $34.33 | $45.04 | 15.2% |
| ServiceNow Inc | 166.53 | 21.84 | 19.13 | 3.12% | $0.48 | $2.08 | 22.19% |
| Palo Alto Networks Inc | 45.82 | 21.01 | 14.71 | 7.42% | $0.39 | $1.62 | 12.09% |
| CrowdStrike Holdings Inc | 401.83 | 23.82 | 19.58 | 1.75% | $0.12 | $0.73 | 31.74% |
| Fortinet Inc | 44.77 | 200.81 | 10.60 | 504.05% | $0.5 | $1.16 | 10.95% |
| Gen Digital Inc | 27.98 | 8.39 | 4.47 | 8.69% | $0.54 | $0.78 | 2.33% |
| Monday.Com Ltd | 334.34 | 15.02 | 16.35 | 1.62% | $0.0 | $0.21 | 34.4% |
| Dolby Laboratories Inc | 33.31 | 2.85 | 5.63 | 1.58% | $0.06 | $0.25 | -3.2% |
| CommVault Systems Inc | 39.49 | 23.77 | 7.98 | 6.62% | $0.02 | $0.18 | 13.38% |
| Qualys Inc | 27.22 | 10.61 | 7.98 | 10.52% | $0.05 | $0.12 | 8.38% |
| Teradata Corp | 45.45 | 37.27 | 1.62 | 57.36% | $0.09 | $0.27 | -5.63% |
| Progress Software Corp | 35.37 | 6.14 | 3.62 | 3.75% | $0.05 | $0.14 | -1.78% |
| N-able Inc | 72.28 | 3.33 | 5.43 | 1.32% | $0.03 | $0.1 | 12.6% |
| SolarWinds Corp | 106.92 | 1.67 | 2.80 | 0.86% | $0.07 | $0.17 | 4.44% |
| Average | 101.32 | 27.76 | 9.52 | 44.08% | $2.62 | $3.77 | 11.22% |
By conducting an in-depth analysis of Oracle, we can identify the following trends:
The Price to Earnings ratio of 43.19 is 0.43x lower than the industry average, indicating potential undervaluation for the stock.The elevated Price to Book ratio of 42.94 relative to the industry average by 1.55x suggests company might be overvalued based on its book value.
The Price to Sales ratio is 8.81, which is 0.93x the industry average. This suggests a possible undervaluation based on sales performance.
The Return on Equity (ROE) of 30.01% is 14.07% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.44 Billion is 2.08x above the industry average, highlighting stronger profitability and robust cash flow generation.
With higher gross profit of $9.4 Billion, which indicates 2.49x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company is witnessing a substantial decline in revenue growth, with a rate of 6.86% compared to the industry average of 11.22%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By considering the Debt-to-Equity ratio, Oracle can be compared to its top 4 peers, leading to the following observations:
Among its top 4 peers, Oracle is placed in the middle with a moderate debt-to-equity ratio of 7.81.
This implies a balanced financial structure, with a reasonable proportion of debt and equity.
Key Takeaways
For Oracle in the Software industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is high, suggesting investors are willing to pay a premium for its assets. The PS ratio is low, signaling a possible undervaluation based on revenue. In terms of ROE, Oracle is performing below industry average, while its high EBITDA and gross profit indicate strong operational performance. The low revenue growth may raise concerns about future prospects compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.