Insights Into Oracle's Performance Versus Peers In Software Sector

Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Oracle (NYSE:ORCL) in comparison to its major competitors within the Software industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.

Oracle Background

Oracle provides enterprise applications and infrastructure offerings through a variety of flexible IT deployment models, including on-premises, cloud-based, and hybrid. Founded in 1977, Oracle pioneered the first commercial SQL-based relational database management system, which is commonly used by the world's largest companies for high-volume online transaction processing workloads. Besides databases, Oracle also sells enterprise resource planning platforms and cloud infrastructure that play an increasingly important role in large language model training and inferencing.

Company	P/E	P/B	P/S	ROE	EBITDA (in billions)	Gross Profit (in billions)	Revenue Growth
Oracle Corp	36.08	18.42	9.11	22.68%	$9.51	$10.68	14.22%
Microsoft Corp	34.56	9.95	12.34	7.85%	$48.06	$53.63	18.43%
ServiceNow Inc	93.90	14.27	12.84	4.52%	$0.89	$2.63	21.81%
Palo Alto Networks Inc	118.28	15.03	13.87	4.05%	$0.5	$1.84	15.66%
Fortinet Inc	33.02	81.17	9.44	33.9%	$0.64	$1.39	14.38%
Gen Digital Inc	30.37	6.94	3.86	5.56%	$0.5	$0.95	25.26%
UiPath Inc	38.38	4.48	5.67	11.08%	$0.02	$0.34	15.92%
Monday.Com Ltd	119.58	5.98	6.70	1.06%	$0.0	$0.28	26.24%
Dolby Laboratories Inc	25.29	2.41	4.79	1.89%	$0.06	$0.27	0.73%
CommVault Systems Inc	71.18	26.25	5.18	5.12%	$0.02	$0.22	18.39%
Qualys Inc	27.69	9.68	8.02	9.7%	$0.06	$0.14	10.41%
Teradata Corp	25.38	13.07	1.80	20.25%	$0.09	$0.25	-5.45%
Average	56.15	17.2	7.68	9.54%	$4.62	$5.63	14.71%

After a detailed analysis of Oracle, the following trends become apparent:

• A Price to Earnings ratio of 36.08 significantly below the industry average by 0.64x suggests undervaluation. This can make the stock appealing for those seeking growth.

• With a Price to Book ratio of 18.42, which is 1.07x the industry average, Oracle might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.

• The stock's relatively high Price to Sales ratio of 9.11, surpassing the industry average by 1.19x, may indicate an aspect of overvaluation in terms of sales performance.

• With a Return on Equity (ROE) of 22.68% that is 13.14% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $9.51 Billion is 2.06x above the industry average, highlighting stronger profitability and robust cash flow generation.

• The gross profit of $10.68 Billion is 1.9x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 14.22% is significantly below the industry average of 14.71%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When examining Oracle in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:

• In the context of the debt-to-equity ratio, Oracle holds a middle position among its top 4 peers.

• This indicates a moderate level of debt relative to its equity with a debt-to-equity ratio of 4.15, which implies a relatively balanced financial structure with a reasonable debt-equity mix.

Key Takeaways

For Oracle in the Software industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, and gross profit, Oracle demonstrates strong performance compared to competitors. However, the company's revenue growth is relatively low, potentially impacting its overall valuation within the sector.

This article was generated by Benzinga's automated content engine and reviewed by an editor.