Intrinsic value of Oracle - ORCL

Previous Close

$48.58

  Intrinsic Value

$37.14

stock screener

  Rating & Target

sell

-24%

Previous close

$48.58

 
Intrinsic value

$37.14

 
Up/down potential

-24%

 
Rating

sell

We calculate the intrinsic value of ORCL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 202.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  1.84
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.43
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
Revenue, $m
  37,728
  40,331
  43,037
  45,852
  48,779
  51,826
  54,999
  58,304
  61,750
  65,342
  69,090
  73,002
  77,088
  81,356
  85,817
  90,480
  95,358
  100,462
  105,803
  111,395
  117,251
  123,384
  129,810
  136,544
  143,601
  150,998
  158,754
  166,887
  175,415
  184,361
  193,744
Variable operating expenses, $m
 
  26,322
  27,799
  29,335
  30,933
  32,597
  34,329
  36,133
  38,014
  39,975
  42,021
  39,853
  42,083
  44,413
  46,848
  49,394
  52,057
  54,843
  57,759
  60,811
  64,008
  67,356
  70,864
  74,540
  78,393
  82,431
  86,665
  91,105
  95,761
  100,644
  105,766
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  25,018
  26,322
  27,799
  29,335
  30,933
  32,597
  34,329
  36,133
  38,014
  39,975
  42,021
  39,853
  42,083
  44,413
  46,848
  49,394
  52,057
  54,843
  57,759
  60,811
  64,008
  67,356
  70,864
  74,540
  78,393
  82,431
  86,665
  91,105
  95,761
  100,644
  105,766
Operating income, $m
  12,710
  14,010
  15,239
  16,516
  17,846
  19,230
  20,670
  22,171
  23,736
  25,367
  27,069
  33,150
  35,005
  36,943
  38,969
  41,086
  43,302
  45,619
  48,045
  50,584
  53,243
  56,028
  58,946
  62,003
  65,208
  68,567
  72,089
  75,782
  79,655
  83,717
  87,978
EBITDA, $m
  15,161
  18,892
  20,160
  21,478
  22,850
  24,277
  25,763
  27,311
  28,925
  30,608
  32,364
  34,196
  36,110
  38,109
  40,199
  42,384
  44,669
  47,059
  49,561
  52,181
  54,924
  57,797
  60,807
  63,961
  67,267
  70,732
  74,365
  78,174
  82,170
  86,360
  90,755
Interest expense (income), $m
  1,612
  1,650
  1,475
  1,631
  1,793
  1,962
  2,137
  2,320
  2,511
  2,709
  2,916
  3,132
  3,357
  3,592
  3,838
  4,095
  4,363
  4,644
  4,938
  5,246
  5,568
  5,905
  6,258
  6,628
  7,016
  7,422
  7,848
  8,295
  8,763
  9,255
  9,770
Earnings before tax, $m
  11,517
  12,360
  13,763
  14,885
  16,052
  17,268
  18,533
  19,851
  21,225
  22,658
  24,153
  30,018
  31,648
  33,351
  35,131
  36,992
  38,938
  40,975
  43,106
  45,338
  47,675
  50,123
  52,688
  55,375
  58,192
  61,145
  64,241
  67,487
  70,892
  74,462
  78,208
Tax expense, $m
  2,182
  3,337
  3,716
  4,019
  4,334
  4,662
  5,004
  5,360
  5,731
  6,118
  6,521
  8,105
  8,545
  9,005
  9,485
  9,988
  10,513
  11,063
  11,639
  12,241
  12,872
  13,533
  14,226
  14,951
  15,712
  16,509
  17,345
  18,221
  19,141
  20,105
  21,116
Net income, $m
  9,335
  9,023
  10,047
  10,866
  11,718
  12,605
  13,529
  14,491
  15,494
  16,540
  17,632
  21,913
  23,103
  24,346
  25,645
  27,004
  28,425
  29,912
  31,468
  33,097
  34,803
  36,590
  38,462
  40,424
  42,480
  44,636
  46,896
  49,266
  51,751
  54,358
  57,092

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  66,078
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  134,991
  73,732
  78,679
  83,824
  89,176
  94,747
  100,547
  106,590
  112,888
  119,455
  126,307
  133,460
  140,928
  148,731
  156,886
  165,412
  174,330
  183,660
  193,425
  203,648
  214,353
  225,566
  237,313
  249,622
  262,524
  276,048
  290,227
  305,095
  320,686
  337,040
  354,193
Adjusted assets (=assets-cash), $m
  68,913
  73,732
  78,679
  83,824
  89,176
  94,747
  100,547
  106,590
  112,888
  119,455
  126,307
  133,460
  140,928
  148,731
  156,886
  165,412
  174,330
  183,660
  193,425
  203,648
  214,353
  225,566
  237,313
  249,622
  262,524
  276,048
  290,227
  305,095
  320,686
  337,040
  354,193
Revenue / Adjusted assets
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
Average production assets, $m
  10,969
  11,736
  12,524
  13,343
  14,195
  15,081
  16,005
  16,967
  17,969
  19,015
  20,105
  21,244
  22,433
  23,675
  24,973
  26,330
  27,749
  29,234
  30,789
  32,416
  34,120
  35,905
  37,775
  39,734
  41,788
  43,940
  46,197
  48,564
  51,046
  53,649
  56,379
Working capital, $m
  50,337
  -6,372
  -6,800
  -7,245
  -7,707
  -8,189
  -8,690
  -9,212
  -9,756
  -10,324
  -10,916
  -11,534
  -12,180
  -12,854
  -13,559
  -14,296
  -15,067
  -15,873
  -16,717
  -17,600
  -18,526
  -19,495
  -20,510
  -21,574
  -22,689
  -23,858
  -25,083
  -26,368
  -27,716
  -29,129
  -30,612
Total debt, $m
  56,929
  42,157
  46,609
  51,240
  56,057
  61,070
  66,290
  71,729
  77,397
  83,308
  89,475
  95,912
  102,633
  109,656
  116,995
  124,669
  132,695
  141,092
  149,880
  159,081
  168,716
  178,807
  189,380
  200,458
  212,070
  224,241
  237,002
  250,383
  264,416
  279,134
  294,572
Total liabilities, $m
  81,131
  66,359
  70,811
  75,442
  80,259
  85,272
  90,492
  95,931
  101,599
  107,510
  113,677
  120,114
  126,835
  133,858
  141,197
  148,871
  156,897
  165,294
  174,082
  183,283
  192,918
  203,009
  213,582
  224,660
  236,272
  248,443
  261,204
  274,585
  288,618
  303,336
  318,774
Total equity, $m
  53,860
  7,373
  7,868
  8,382
  8,918
  9,475
  10,055
  10,659
  11,289
  11,946
  12,631
  13,346
  14,093
  14,873
  15,689
  16,541
  17,433
  18,366
  19,342
  20,365
  21,435
  22,557
  23,731
  24,962
  26,252
  27,605
  29,023
  30,509
  32,069
  33,704
  35,419
Total liabilities and equity, $m
  134,991
  73,732
  78,679
  83,824
  89,177
  94,747
  100,547
  106,590
  112,888
  119,456
  126,308
  133,460
  140,928
  148,731
  156,886
  165,412
  174,330
  183,660
  193,424
  203,648
  214,353
  225,566
  237,313
  249,622
  262,524
  276,048
  290,227
  305,094
  320,687
  337,040
  354,193
Debt-to-equity ratio
  1.057
  5.720
  5.920
  6.110
  6.290
  6.450
  6.590
  6.730
  6.860
  6.970
  7.080
  7.190
  7.280
  7.370
  7.460
  7.540
  7.610
  7.680
  7.750
  7.810
  7.870
  7.930
  7.980
  8.030
  8.080
  8.120
  8.170
  8.210
  8.250
  8.280
  8.320
Adjusted equity ratio
  -0.177
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9,335
  9,023
  10,047
  10,866
  11,718
  12,605
  13,529
  14,491
  15,494
  16,540
  17,632
  21,913
  23,103
  24,346
  25,645
  27,004
  28,425
  29,912
  31,468
  33,097
  34,803
  36,590
  38,462
  40,424
  42,480
  44,636
  46,896
  49,266
  51,751
  54,358
  57,092
Depreciation, amort., depletion, $m
  2,451
  4,883
  4,921
  4,962
  5,004
  5,047
  5,093
  5,140
  5,190
  5,241
  5,295
  1,046
  1,105
  1,166
  1,230
  1,297
  1,367
  1,440
  1,517
  1,597
  1,681
  1,769
  1,861
  1,957
  2,059
  2,165
  2,276
  2,392
  2,515
  2,643
  2,777
Funds from operations, $m
  15,350
  13,905
  14,968
  15,828
  16,722
  17,653
  18,622
  19,632
  20,684
  21,782
  22,927
  22,960
  24,208
  25,512
  26,876
  28,301
  29,792
  31,352
  32,984
  34,694
  36,484
  38,358
  40,323
  42,381
  44,539
  46,800
  49,171
  51,658
  54,265
  57,000
  59,869
Change in working capital, $m
  1,224
  -411
  -428
  -445
  -463
  -481
  -501
  -522
  -544
  -568
  -592
  -618
  -645
  -674
  -705
  -737
  -771
  -806
  -844
  -884
  -925
  -969
  -1,015
  -1,064
  -1,115
  -1,169
  -1,225
  -1,285
  -1,348
  -1,413
  -1,483
Cash from operations, $m
  14,126
  14,317
  15,396
  16,273
  17,185
  18,134
  19,123
  20,154
  21,228
  22,349
  23,519
  23,578
  24,854
  26,187
  27,580
  29,038
  30,563
  32,158
  33,828
  35,577
  37,409
  39,328
  41,338
  43,445
  45,654
  47,969
  50,397
  52,943
  55,613
  58,414
  61,352
Maintenance CAPEX, $m
  0
  -540
  -578
  -617
  -657
  -699
  -743
  -788
  -836
  -885
  -937
  -990
  -1,046
  -1,105
  -1,166
  -1,230
  -1,297
  -1,367
  -1,440
  -1,517
  -1,597
  -1,681
  -1,769
  -1,861
  -1,957
  -2,059
  -2,165
  -2,276
  -2,392
  -2,515
  -2,643
New CAPEX, $m
  -2,021
  -768
  -788
  -819
  -852
  -887
  -923
  -962
  -1,003
  -1,045
  -1,091
  -1,138
  -1,189
  -1,242
  -1,298
  -1,357
  -1,419
  -1,485
  -1,554
  -1,627
  -1,704
  -1,785
  -1,870
  -1,959
  -2,054
  -2,153
  -2,257
  -2,367
  -2,482
  -2,603
  -2,730
Cash from investing activities, $m
  -21,494
  -1,308
  -1,366
  -1,436
  -1,509
  -1,586
  -1,666
  -1,750
  -1,839
  -1,930
  -2,028
  -2,128
  -2,235
  -2,347
  -2,464
  -2,587
  -2,716
  -2,852
  -2,994
  -3,144
  -3,301
  -3,466
  -3,639
  -3,820
  -4,011
  -4,212
  -4,422
  -4,643
  -4,874
  -5,118
  -5,373
Free cash flow, $m
  -7,368
  13,009
  14,030
  14,837
  15,675
  16,548
  17,457
  18,404
  19,390
  20,419
  21,491
  21,449
  22,618
  23,840
  25,116
  26,450
  27,846
  29,306
  30,834
  32,433
  34,108
  35,862
  37,699
  39,625
  41,643
  43,758
  45,975
  48,300
  50,739
  53,296
  55,978
Issuance/(repayment) of debt, $m
  13,638
  -4,975
  4,453
  4,630
  4,817
  5,013
  5,220
  5,438
  5,668
  5,911
  6,167
  6,437
  6,722
  7,022
  7,339
  7,674
  8,026
  8,397
  8,788
  9,201
  9,635
  10,092
  10,573
  11,079
  11,611
  12,172
  12,761
  13,381
  14,033
  14,718
  15,438
Issuance/(repurchase) of shares, $m
  -1,663
  771
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  11,717
  -4,204
  4,453
  4,630
  4,817
  5,013
  5,220
  5,438
  5,668
  5,911
  6,167
  6,437
  6,722
  7,022
  7,339
  7,674
  8,026
  8,397
  8,788
  9,201
  9,635
  10,092
  10,573
  11,079
  11,611
  12,172
  12,761
  13,381
  14,033
  14,718
  15,438
Total cash flow (excl. dividends), $m
  4,263
  8,804
  18,483
  19,467
  20,492
  21,562
  22,677
  23,842
  25,058
  26,329
  27,658
  27,886
  29,340
  30,862
  32,455
  34,124
  35,872
  37,703
  39,622
  41,634
  43,742
  45,953
  48,272
  50,704
  53,254
  55,930
  58,736
  61,681
  64,771
  68,014
  71,417
Retained Cash Flow (-), $m
  -6,571
  -9,794
  -495
  -514
  -535
  -557
  -580
  -604
  -630
  -657
  -685
  -715
  -747
  -780
  -815
  -853
  -892
  -933
  -976
  -1,022
  -1,071
  -1,121
  -1,175
  -1,231
  -1,290
  -1,352
  -1,418
  -1,487
  -1,559
  -1,635
  -1,715
Prev. year cash balance distribution, $m
 
  56,281
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  55,291
  17,988
  18,953
  19,957
  21,005
  22,097
  23,238
  24,428
  25,673
  26,973
  27,171
  28,593
  30,082
  31,640
  33,271
  34,980
  36,770
  38,646
  40,611
  42,672
  44,832
  47,097
  49,473
  51,964
  54,577
  57,319
  60,195
  63,212
  66,379
  69,701
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  53,012
  16,468
  16,494
  16,433
  16,281
  16,037
  15,699
  15,268
  14,748
  14,141
  12,903
  12,202
  11,438
  10,622
  9,768
  8,889
  8,001
  7,117
  6,253
  5,422
  4,637
  3,908
  3,242
  2,647
  2,123
  1,672
  1,292
  978
  725
  525
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Oracle Corporation (Oracle) provides products and services that address all aspects of corporate information technology (IT) environments, including application, platform and infrastructure. The Company's businesses include cloud and on-premise software, hardware and services. Its cloud and on-premise software business consists of three segments, including cloud software and on-premise software, which includes Software as a Service (SaaS) and Platform as a Service (PaaS) offerings, cloud infrastructure as a service (IaaS) and software license updates and product support. Its hardware business consists of two segments, including hardware products and hardware support. The Company's services business includes the remainder of the Company's segments. Its services business includes activities, such as consulting services, enhanced support services and education services, among others.

FINANCIAL RATIOS  of  Oracle (ORCL)

Valuation Ratios
P/E Ratio 21.5
Price to Sales 5.3
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 14.2
Price to Free Cash Flow 16.6
Growth Rates
Sales Growth Rate 1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 70%
Cap. Spend. - 3 Yr. Gr. Rate 28.4%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 87.5%
Total Debt to Equity 105.7%
Interest Coverage 8
Management Effectiveness
Return On Assets 8.6%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 9.3%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 18.5%
Return On Equity - 3 Yr. Avg. 19.3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 80.2%
Gross Margin - 3 Yr. Avg. 80.1%
EBITDA Margin 41.3%
EBITDA Margin - 3 Yr. Avg. 42.3%
Operating Margin 33.7%
Oper. Margin - 3 Yr. Avg. 34.7%
Pre-Tax Margin 30.5%
Pre-Tax Margin - 3 Yr. Avg. 31.7%
Net Profit Margin 24.7%
Net Profit Margin - 3 Yr. Avg. 24.9%
Effective Tax Rate 18.9%
Eff/ Tax Rate - 3 Yr. Avg. 21.2%
Payout Ratio 28.2%

ORCL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ORCL stock intrinsic value calculation we used $37728 million for the last fiscal year's total revenue generated by Oracle. The default revenue input number comes from 2017 income statement of Oracle. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ORCL stock valuation model: a) initial revenue growth rate of 6.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for ORCL is calculated based on our internal credit rating of Oracle, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Oracle.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ORCL stock the variable cost ratio is equal to 66%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ORCL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Oracle.

Corporate tax rate of 27% is the nominal tax rate for Oracle. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ORCL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ORCL are equal to 29.1%.

Life of production assets of 20.3 years is the average useful life of capital assets used in Oracle operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ORCL is equal to -15.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $53860 million for Oracle - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 4173.4 million for Oracle is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Oracle at the current share price and the inputted number of shares is $202.7 billion.

RELATED COMPANIES Price Int.Val. Rating
CRM Salesforce.com 106.83 91.90  hold
IBM International 151.77 173.22  hold
INTC Intel 44.65 40.49  hold
MSFT Microsoft 83.11 60.77  sell
EPAY Bottomline Tec 33.56 5.15  str.sell
HPE Hewlett Packar 13.10 39.38  str.buy
SAP SAP ADR 113.85 84.34  sell
RHT Red Hat 126.59 69.28  sell
NOK Nokia ADR 5.05 8.37  buy

COMPANY NEWS

▶ Are Oracle Corporations (ORCL) Interest Costs Too High?   [Nov-23-17 12:31PM  Simply Wall St.]
▶ 3 Blue Chip Tech Stocks to Buy Now   [Nov-22-17 01:17PM  Zacks]
▶ Forget Bitcoin: You're Better Off Buying These 3 Stocks   [Nov-21-17 09:11PM  Motley Fool]
▶ Tax Overhaul Could End Record Pileup of Offshore Cash   [Nov-20-17 01:42PM  The Wall Street Journal]
▶ Is Amazon Fending Off Its Cloud Competition?   [Nov-17-17 04:25PM  Market Realist]
▶ [$$] Jana Exits Blue Apron, Sells Altaba, Buys Oracle   [Nov-16-17 09:32AM  Barrons.com]
▶ Oracle CEO says idea that most Silicon Valley companies are into AI is 'just nonsense'   [Nov-14-17 05:47PM  American City Business Journals]
▶ Oracle Shows Tech Middle Age Can Be Beautiful   [Nov-13-17 02:00PM  Bloomberg]
▶ Oracle Earns Relative Strength Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Broadcom's megadeal for Qualcomm would top tech deal list   [Nov-06-17 04:24PM  Associated Press]
▶ (ADP) Who are ADP's Main Competitors?   [10:48AM  Investopedia]
▶ On Free Speech and How It Protects Sex Traffickers   [Oct-31-17 02:57PM  Fortune]
▶ At Oracle, Its All About the Cloud   [12:15AM  The Wall Street Journal]
▶ At Oracle, It's All About the Cloud   [Oct-23-17 10:15PM  The Wall Street Journal]
▶ Oracle CEO: Were growing faster than any other scaled cloud company   [Oct-20-17 08:51PM  Fox Business Videos]
▶ MongoDB Has Strong Debut In Latest Tech IPO   [Oct-19-17 03:31PM  Fortune]
▶ 3 Top Stocks Billionaires Love   [07:47AM  Motley Fool]
▶ [$$] Oracle Pitches Security of the Cloud to Software Clients   [Oct-18-17 04:23PM  The Wall Street Journal]
Financial statements of ORCL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.