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General information
Oracle Corporation supplies software for enterprise information management. The Company offers databases and relational servers, application development and decision support tools, and enterprise business applications. Oracle"s software runs on network computers, personal digital assistants, set-top devices, PCs, workstations, minicomputers, mainframes, and massively parallel computers.
  • Pretty weak financial results growth rate 2.7% (average between last period year over year growth for revenue and EBITDA), there is slowdown compared to average historical growth rates (2.8%)
  • Dividend yield for the last twelve months 1.7%
  • Free cash flow yield 7.3% (LTM)
  • Share price is 39.7% higher than minimum and 9.6% lower than maximum for the last 3 years
  • The company is undervalued by EV / LTM EBITDA multiple compared to target level (11.8x vs 12.3x)
  • Fundamental value created in LTM (estimate) 11.2%
Key Financials
Ticker: ORCL
Share price, USD: 55.59
Common stocks: 3 207 649 000

Dividend Yield:  1.7%
FCF Yield LTM: 7.3%
EV / LTM EBITDA: 11.8x
Last revenue growth (y/y):  1.6%
Last growth of EBITDA (y/y):  3.7%
Historical revenue growth:  1.0%
Historical growth of EBITDA:  4.6%
Target EV / EBITDA (hist 75% percentile): 12.3x
Express share price potential: 5.4%
Fundamental value created in LTM: 11.2%
EV / LTM EBITDA mutiple calculation
Market Cap ($m): 178 313
Net Debt ($m): 29 136
EV (Enterprise Value): 207 449
EBITDA LTM ($m): 17 605
EV / LTM EBITDA: 11.8x

Revenue and EBITDA

Quarterly values ($m)

Change (y/y)

Cash Flow

Free Cash Flow ($m)

Net Debt / Cash and Equivalents ($m)

Share price and dividends

Share price

Payment USD per share

Multiple and potential

EV / LTM EBITDA and 75% percentile

Potential dynamics

Value Creation

Fundamental Value Creation is calculated as ratio of value created in the last period to current market cap of the company.

The fundamental value can be created in two ways:
• cash generation in form of dividend payments or debt reduction or share buybacks
growth of the company enterprise value through improving financial results

The growth of enterprise value in the last period is estimated as product of:
• annualized increase of EBITDA in the last reporting period year over year
• relevant EV/EBITDA multiple (average between actual EV/EBITDA for the company and average general level of 10.0x is applied)

Parameter
#
Formula
Value
    
    
            EBITDA (pre LTM Q)
(1)
3 771
            EBITDA (last Q)
(2)
3 912
            EBITDA LTM
(3)
17 605
    
    
        EBITDA LTM / last Q
(4)
(3) / (2)
4.500
    Gain of EBITDA (mln $)
(5)
( (2)-(1) ) * (4)
635
    
    
            EV
(6)
208 219
        Mult
(7)
(6) / (3)
11.8x
        Mult common
(8)
const
10.0x
    Mult avg
(9)
avgerage
10.9x
    
    
    Equity+
(10)
(5) * (9)
6 925
    FCF LTM
(11)
13 032
    
    
Value+
(12)
(10) + (11)
19 957
Cap
(13)
178 313
    
    
Fundamental value creation
(14)
(12) / (13)
11.2%

Potential

EBITDA LTM       17 605
 
EBITDA E       17 654
Mult aim       12.3x
 
EV E       216 754
NetDebt corr       28 870
 
Cap E       187 884
Cap       178 313
Growth potential            5.4%