After the closing bell yesterday, software giant Oracle (ORCL – Free Report) reported fiscal second-quarter 2018 results. While the company beat the Zacks Consensus Estimate for revenues and earnings, it disappointed investors with a bleak outlook.
Oracle Q2 Earnings in Focus
Earnings per share came in at 70 cents, a couple of cents ahead of the Zacks Consensus Estimate and up 14% year over year. Revenues increased 6% year over year to $9.63 billion and were above the estimated $9.55 billion.
The company’s long process of shifting to the Web-based cloud computing business is now paying off more than offsetting the decline in the legacy business. Cloud software platform sales climbed 44% from the year-ago quarter to $1.52 billion and accounted for 16% of total revenues. However, it is well below Reuters expectation of $1.56 billion.
For the fiscal third quarter, the world’s largest database software maker expects total revenues to grow 2-4% on a constant currency basis, below the Zacks Consensus Estimate of 4.23% growth. This is because cloud sales are expected to increase 21-25%, lower than growth of 44% in the recently reported quarter and analyst expectation of 42% increase, suggesting a slowdown in the soaring cloud business. Further, the company expects earnings per share of 68-70 cents, which is also below the Zacks Consensus Estimate of 72 cents, reflecting some concerns in the company’s future growth.
The disappointing outlook pushed shares of Oracle down as much as nearly 7% in aftermarket trade with elevated volumes. Currently, the stock has a Zacks Rank #3 (Hold) and a dismal Industry Rank in the bottom 35%. The Value and Growth Style Score is impressive at B and A, respectively.
ETFs in Focus
ETFs with the highest allocation to this software giant look to be big movers this week and in the next, as investors digest its scores and views. They should closely monitor the movement in these funds and grab any opportunity from a surge in the price of ORCL or avoid if the stocks drags them down:
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