Oracle Corporation (ORCL)

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Why Shares Of Oracle Are Down By 8% Today?
By: Vladimir Zernov | March 11, 2021

• The stock is under strong pressure in today’s trading session.

Oracle Stock Falls After The Release Of Quarterly Report

Shares of Oracle gained strong downside momentum and are down by 8% in today’s trading session after the company provided its quarterly report.

Oracle reported revenue of $10.1 billion and GAAP EPS of $1.68 per share, beating analyst estimates on both earnings and revenue. The company announced that it increased its quarterly dividend from $0.24 per share to $0.32 per share.

At current levels, the stock yields 2.13%. While this yield is not sufficient enough to attract yield-hunters, the 33.3% increase of the dividend was certainly good news for current shareholders.

In addition to raising the dividend, the company’s Board of Directors increased the share repurchase program by $20 billion.

Interestingly, solid results, higher dividend and the increase of share repurchase program failed to provide support to the stock which found itself under strong pressure after the release of the quarterly report.

What’s Next For Oracle?

Shares of Oracle rallied at the beginning of March on expectations of a strong quarterly report. The report brought good news, but it was not sufficient enough for investors who remained focused on finding high-growth companies.

The stock traded at all-time high levels before the release of the quarterly report, and it looks that the market expected more than a dividend increase and an expansion of the share buyback program.

At the same time, it should be noted that Oracle offers stable growth and reasonable valuation compared to many peers. The stock is trading at less than 15 forward P/E which may attract investors who are searching for cheaper plays in the tech sector.

While the market has generally favored higher-growth, expensive stocks in recent years, the situation may change if Treasury yields continue to move higher and traders start to pay more attention to valuations. In this scenario, shares of Oracle will likely get additional support.

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