Today’s 2014 Top Picks update is a tech company whose shares were recently initiated as a Buy at Maxim Group.
Oracle (ORCL 40)
from Hendershot Investments
Oracle (ORCL) reported fiscal 2014 fourth quarter total revenues were up 3% to $11.3 billion with net income down 4% to $3.46 billion and EPS flat at $0.80. Oracle continues to successfully transition from delivering on-premise licensed software solutions to offering cloud subscription services.
During the quarter, Oracle repurchased 49 million shares for $2 billion, or $40.81 per average share. For the full 2014 fiscal year, Oracle reported total revenues of $38.3 billion, up 3% from last year with net income of $11 billion, flat with last year and EPS of $2.38, up 5% from last year on fewer shares outstanding. Oracle generated $14.3 billion in free cash flow during the year and returned more than 80% of that cash flow to shareholders through share buybacks of $9.8 billion and dividends of $2.2 billion.
The company ended the year with a strong balance sheet with more than $38 billion in cash and marketable securities. For the year, Oracle generated an excellent 23% return on shareholders’ equity. Looking ahead to the first quarter of fiscal 2015, the company expects revenues to increase 4% to 6% from the same period last year with EPS in the range of $0.49 to $0.53.
With a free cash flow yield of 8% based on the company’s current market capitalization, Oracle continues to appear attractively valued. Buy.
Ingrid R. Hendershot, Hendershot Investments, www.hendershotinvestments.com, 703-361-6130, July 17, 2014