Oracle Corporation (ORCL) surpassed revenue estimates in its fiscal 2023 first quarter. Also, recently, ORCL launched Oracle Public Safety Services, a new technology platform for law enforcement and first responders.

Steve Seoane, senior vice president and general manager of ORCL Local Government, said, "Oracle has a deep history in solving the complex problems of the world's most essential industries. We are bringing this expertise to public safety to provide our first responders with the cutting-edge technology they need to better serve our communities."

The stock has gained 5.6% over the past month and 15.4% over the past six months. However, ORCL has lost 8.4% year-to-date and 10% over the past year to close the last trading session at $79.86.

In terms of forward EV/EBIT, ORCL is trading at 14.44x, 10.5% lower than the industry average of 16.13x, while its forward Price/Cash Flow of 13.61x is 23.5% lower than the industry average of 17.79x.

In addition, ORCL has an impressive dividend-paying record. It has paid dividends for eight consecutive years. Its dividend payouts have grown 12.2% CAGR for the past five years. Its current dividend yield is 1.60%, while its four-year average yield is 1.59%.

Here is what could shape ORCL's performance in the near term:

Strong Top-line Growth

ORCL's total revenues came in at $11.45 billion for the fiscal 2023 first quarter that ended August 31, 2022, up 17.7% year-over-year. Its cloud services and license support segment revenue came in at $8.42 billion, up 14.2% year-over-year. Moreover, its services revenue came in at $1.36 billion, up 74.3% year-over-year.

Also, its non-GAAP operating income came in at $4.48 billion, up 3.3% year-over-year. Its non-GAAP EPS remained constant at $1.03.

Favorable Analyst Expectations

ORCL's revenue is expected to increase 16.4% year-over-year to $49.40 billion in 2023 and 7.3% year-over-year to $52.99 billion in 2024. Its EPS is expected to increase marginally year-over-year to $4.95 in 2023 and 14.5% year-over-year to $5.67 in 2024.

In addition, its EPS is expected to rise 10.8% per annum for the next five years. Furthermore, Wall Street analysts expect the stock to hit $88.35 in the near term, indicating a potential upside of 10.6%.

Robust Profitability

ORCL's trailing-12-month gross profit margin of 77.78% is 56.3% higher than the industry average of 49.77%. Its trailing-12-month EBITDA and net income margins of 41.68% and 13.15% are 252.1% and 305.2% higher than the industry averages of 11.84% and 3.25%, respectively.

ORCL's trailing-12-month ROTC and ROTA of 11.30% and 4.46% are compared with the industry averages of 3.34% and 1.66%, respectively.

POWR Ratings Reflect Promising Outlook

ORCL has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. ORCL has a B grade for Stability and Sentiment, in sync with its 24-month beta of 0.99 and favorable analyst expectations.

In the 138-stock Software – Application industry, ORCL is ranked #20.

Click here for the additional POWR Ratings for ORCL (Growth, Value, Momentum, Quality).

View all the top stocks in the Software – Application industry here.

Bottom Line

ORCL's top-line growth has been robust. Moreover, the stock is trading above its 50-day and 200-day moving averages of $74.34 and $74.30, respectively. Given ORCL's sound profitability and favorable outlook, it might be an ideal buy now.

How Does Oracle Corporation (ORCL) Stack up Against Its Peers?

While ORCL has an overall POWR Rating of B, one might consider looking at its industry peers, Commvault Systems, Inc. (CVLT), eGain Corporation (EGAN), and IBEX Limited (IBEX), which have an overall A (Strong Buy) rating.

ORCL shares were trading at $80.20 per share on Monday afternoon, up $0.34 (+0.43%). Year-to-date, ORCL has declined -6.44%, versus a -15.77% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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