Oracle Corp (ORCL) is set to report fiscal second-quarter 2014 results on Dec 18. In the prior quarter, the company reported a positive surprise of 5.66%. Moreover, Oracle posted an average positive earnings surprise of 2.52% over the past four quarters.
Let us see how things are shaping up for the company in this quarter.
Carlson Capital's Double Black Diamond Fund returned 85 basis points net in August, bringing its year-to-date net return to 4.51%. According to a copy of the fund's September update, which ValueWalk has been able to review, its equity relative value and event-driven strategies outperformed during the month, contributing 131 basis points to overall P&L. Double Read More
Growth Factors this Past Quarter
Oracle’s second-quarter guidance was cautious due to tough year-over-year comparisons and lack of visibility surrounding the closure of corporate deals.
Management’s forecast for new software license and cloud subscription revenues were to grow in the range of (6.0%) to 4.0%. Hardware product revenues were expected to decline in the range of 11.0% to 1.0%.
Amid slowing IT spending, soft demand environment and sluggish hardware sales, we believe that a rise in new software license and cloud revenues will be positives for Oracle. However, a decline will reflect market share loss to IBM, Cisco, Workday and Salesforce.
Our proven model does not conclusively show that Oracle is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 64 cents. Hence, the difference is of 0.0%.
Zacks Rank #3: Oracle’s Zacks Rank #3 when combined with an ESP of 0.0% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat in the upcoming quarter.
Winnebago Industries (WGO), with Earnings ESP of +10.26% and a Zacks Rank #1 (Strong Buy).
Apogee Enterprises (APOG), with Earnings ESP of +3.03% and a Zacks Rank #2 (Buy).
Worthington Industries (WOR), with Earnings ESP of +3.57% and a Zacks Rank #2 (Buy).