Oracle’s stock price surged 13% following the announcement of their fourth-quarter results for FY2024, which included better-than-expected financial guidance for FY2025. The company also revealed partnership deals with Microsoft, Open AI, and Google. Despite missing consensus estimates for revenues and earnings in the fourth quarter, Oracle’s stock is currently trading at its fair value of $140 per share, according to Trefis’ valuation.
Over the past three years, Oracle’s stock has outperformed the S&P 500, with returns of 35% in 2021, -6% in 2022, and 29% in 2023. This is in stark contrast to other heavyweights in the Information Technology sector and megacap stars such as Microsoft, Apple, and Google. The Trefis High Quality Portfolio, consisting of 30 stocks, has also consistently outperformed the S&P 500 during the same period, suggesting a trend of better returns with less risk compared to the benchmark index.
In Q4 2024, Oracle reported total revenues of $14.3 billion, a 3% increase year-over-year, driven by a 9% rise in cloud services and license support revenues. Operating expenses decreased slightly, resulting in a 13% increase in operating income to $4.69 billion. For the full year FY 2024, total revenues grew 6% to $52.96 billion, with cloud services and license support revenues leading the way with a 12% gain. Net income improved 23% year-over-year to $10.47 billion.
Looking ahead, Oracle expects Non-GAAP earnings for Q1 FY2025 to be between $1.33 and $1.37, with revenues projected to reach $57.7 billion for the full fiscal year. The company anticipates an improvement in net income margin for FY2025, resulting in an annual GAAP EPS of $4.41. With a P/E multiple just below 32x, this would lead to a valuation of $140 per share for Oracle.
Despite some challenges in meeting revenue and earnings estimates in the fourth quarter, Oracle’s stock has seen strong gains in recent years and continues to outperform the broader market. The company’s strategic partnerships with industry leaders and focus on cloud services and license support revenues have contributed to its growth. With a positive outlook for FY2025 and expected improvements in net income margin, Oracle remains an attractive investment option for investors looking for stable growth and solid returns in the tech sector.
