{"id":11988,"date":"2021-09-12T16:06:30","date_gmt":"2021-09-12T22:06:30","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=11988"},"modified":"2021-09-12T16:06:30","modified_gmt":"2021-09-12T22:06:30","slug":"sp-500-weekly-earnings-oracle-reports-this-week-but-revisions-should-dwindle","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=11988","title":{"rendered":"SP 500 Weekly Earnings: Oracle Reports This Week, But Revisions Should Dwindle"},"content":{"rendered":"

Oracle (ORCL) is the only company that reports this week that this blog follows with any frequency. The stock is up 60% YTD in calendar 2021. The sell-side consensus is looking for $0.97 on $9.77 billion for “expected” year-over-year growth of 4% respectively. The Oracle “story” so to speak is that operating margin was 48.5% in fiscal q4 ’21, the highest gross margin since Q4, 2013, and the share repurchase activity has been sizable. In May ’18 or fiscal Q4 ’18, Oracle had 4.15 billion shares outstanding, and yet last quarter fully-diluted shares outstanding had fallen to 2.9 billion shares for a net removal of 1.25 billion shares or a quarter of ORCL’s fully diluted shares outstanding. (Traveling to see clients the last 48 hours, I’m just getting to the earnings update this Sunday night. It would be interesting to compare Oracle’s share count reduction with the SP 500’s ” Big 6″ or the top tech-weighted mega caps in the SP 500 today.)<\/p>\n

To compare, Oracle’s net income was a little over $4 billion in Q4 ’18 or May ’18, and the same net income number was $4.5 billion as of May ’21. Put another way, if we use the May ’18 share count for the May ’21 quarter, EPS would have been just $1.09 vs the $0.99 in Q4 ’18 16 quarters ago, on an “operational” basis, or roughly a 10% increase over 4 years or 2.5% per year, excluding share reduction impact.<\/p>\n

L-T debt has increased from $56 billion in May ’18 to $76 billion as of May ’21. Do we need to wonder where that is going ?<\/p>\n

Frankly, I wished more of the stock had been bought for clients. Fundamentally, the cloud is as much a challenge for Oracle as it is an opportunity.<\/p>\n

Dan Niles has been very right on the stock in 2021.<\/p>\n

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SP 500 – by the numbers:<\/strong><\/em><\/p>\n