Industry Comparison: Evaluating Oracle Against Competitors In Software Industry

In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Oracle ORCL alongside its primary competitors in the Software industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to investors and shed light on company's performance within the industry.

Oracle Background

Oracle provides database technology and enterprise resource planning, or ERP, software to enterprises around the world. Founded in 1977, Oracle pioneered the first commercial SQL-based relational database management system. Today, Oracle has 430,000 customers in 175 countries, supported by its base of 136,000 employees.

After thoroughly examining Oracle, the following trends can be inferred:

• With a Price to Earnings ratio of 44.78, which is 0.42x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

• The elevated Price to Book ratio of 44.52 relative to the industry average by 1.4x suggests company might be overvalued based on its book value.

• With a relatively low Price to Sales ratio of 9.14, which is 0.87x the industry average, the stock might be considered undervalued based on sales performance.

• With a Return on Equity (ROE) of 30.01% that is 17.63% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.44 Billion, which is 1.93x above the industry average, indicating stronger profitability and robust cash flow generation.

• The company has higher gross profit of $9.4 Billion, which indicates 2.32x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 6.86% is significantly below the industry average of 12.04%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

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 comparing Oracle with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:

• When evaluating the debt-to-equity ratio, Oracle is in the middle position among its top 4 peers.

• The company maintains a moderate level of debt relative to its equity with a debt-to-equity ratio of 7.81, suggesting a relatively balanced financial structure.

Key Takeaways

For Oracle in the Software industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB ratio suggests the market values Oracle's assets highly. A low PS ratio implies that investors are paying less for each dollar of Oracle's sales. Oracle's low ROE may indicate less efficient use of shareholder funds. The high EBITDA and gross profit suggest strong operational performance. The low revenue growth may raise concerns about Oracle's future prospects compared to industry peers.

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