Insider Concerns Just Created a Buying Opportunity in Oracle Corporation (ORCL)

On 07 February, shares of Oracle Corporation (NYSE:ORCL) closed lower after a volatile session. The shares dropped -1.04 points or -2.03 percent at $50.22 with a light trade volume of 14.793 million shares. After opening the session at $50.79, the shares went as high as $50.985 and as low as $50.17, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $178 billion and now has 3.55 billion shares outstanding. Oracle Corporation (ORCL) stock has gained 4.89 percent of market value in 21 trading days.

ORCL stock has a trailing 3-year beta of 1.07, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $2.67 a share in the trailing twelve months. The stock’s value has surged 11.23 percent year to date (YTD) against a rise of 1.66 percent in 12 month’s time. The company’s shares still trade -6.1 percent away from its 1-year high of $53.48 and 18.44 percent up from 52-week low of $42.40. The average consensus rating on the company is 2.5, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Oracle Corporation (ORCL) will probably climb 4.34 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $61 price as 12-month high target. This represents a whopping 21.47 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $53, which represents a return potential of 5.54 percent when compared to the closing price of the stock of $50.22 on Thursday, February 07. The lowest price target for the stock is $33 — slightly more than -34.29 percent from ORCL’s current share price.

History has shown that shares in Oracle Corporation have gone down on 19 different earnings reaction days and are predicted to add 0.04 percent when the company reports upcoming earnings. Investors will get their next glimpse of ORCL’s Q3 earnings on March 19. Analysts are forecasting revenue to suffer decline of -1.7 percent to $9.61B in the fiscal third quarter, while earnings are seen soaring by nearly 1.2 percent to $0.84 per share. It earned $0.8 per share, better than the $0.78, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $9.57B, better than the $9.52B analysts expected. Earnings are estimated to increase by 15 percent this year, 7.61 percent next year and continue to increase by 10.03 percent annually for the next 5 years.

Let’s take a look at some insider activity at Oracle Corporation (NYSE:ORCL) and see the pattern. The earliest insider trade took place on 01/15/2019. Garcia-Molina Hector parted with a total of 3.75 thousand shares of company at average share price of $48.2. The total for the sales was set at $180.75 thousand. After this transaction, the Director account balance stood at 26.09 thousand shares. The stock grew 4.19 percent since that insider sale. On 12/27/2018, Daley Dorian, EVP, Gen’l Counsel, Secretary, sold 25 thousand shares at a price per share of $45. This removed 1.13 million shares from the insider’s fortune and the stock saw a 11.6 percent rally in value since the news became public. This transaction left 77.92 thousand shares in the EVP, Gen’l Counsel, Secretary account.

On 12/24/2018, EVP, Gen’l Counsel, Secretary Daley Dorian performed a sale transaction worth $272.5 thousand. This sale at $43.24 each has eliminated 6.3 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded 16.14 percent increase since the transaction was reported. The insider now is left with 77.92 thousand shares remaining in the account. Garcia-Molina Hector, who performs the Director job, sold 3.75 thousand shares for $174.08 thousand. The disposal occurred on 12/17/2018 was priced at $46.42 per share. The share price soared 8.19 percent since the reporting date. Garcia-Molina Hector now left with a stake of 26.09 thousand ORCL stock worth $1.31 million after the insider selling.

The stock is currently hovering around the first support level of $49.93. Below this, the next support is placed in the zone of $49.64. Till the time, the ORCL stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 60.1 on daily chart, which may remain a cause for concern. If the price breaks below $49.64 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $50.75 mark may result into a pull-back move towards $51.27 level.

Shares of Oracle Corporation (ORCL) are trading at a P/E ratio of 19.2 times earnings reported for the past 12 months. The industry ORCL operates in has an average P/E of 32.65. Its P/E ratio went as low as 17.66X and as high as 20.5 over the 5-year span.Further, it is sporting a 4.48 on the Price-to-Sales ratio. Compare this with the industry average P/S of 8290.46. 79.6 percent is the gross profit margin for Oracle Corporation and operating margin sits at 34.4 percent. Along with this, the net profit margin is 10 percent.