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Market Update

We're Sanguine About Oracle's Growth Prospects

Oracle continues to generate copious amounts of cash flow, which is one of the reasons why we're increasing our fair value estimate for the firm.


 Oracle (ORCL) reported results for its second fiscal quarter, posting tepid revenue growth but generating record free cash flow as measured on a trailing 12-month basis. Generally, the absence of bad news was good news from our vantage point. As the company transitions its product suite to react to the competition and market demand for cloud products, we maintain a modest but sanguine view about its ability to resume growth. 

Our investment thesis remains intact, and we are sticking with our wide moat rating. We are also increasing our fair value estimate based on cash earned and our updated forecast. Although we typically prefer a wider margin of safety before recommending investment, we still believe the stock is attractive at these levels.

Rick Summer does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.