233% and an Oracular Spectacular! (ORCL, FLO)

Oracle (NASDAQ:ORCL) made its name as a database software company—the world’s largest, in fact.

But they’ve since transitioned to be players in the cloud altitudes.

And before long, say the company’s cheerleaders, they’ll be leaders in AI, as well.

Machine learning, you know, is so ‘in’.

It was precisely that excitement over artificial intelligence that goosed the market higher in the last month, and Oracle’s prospects in the AI field served her well on the trading floor as well.

As the chart below will show, ORCL stock was no laggard.  Sales and earnings beats certainly contributed to the resulting pop, but it was talk of AI that tickled the glands of the stock bulls.

Closing One…

Before we get to our oracular spectacular, we have one trade on the docket to be closed.

It’s our FLO initiative, whose details can be found HERE.

In essence, we’re holding two short FLO October 25^th CALLs and a credit of $2.50.

And…

We’ve waited long enough.

The CALLs can be repurchased for $1.00 each, and we say it’s time to do so.

Do it, and you walk with $0.50 NET on ZILCH spent.

And that’s a fine 233% (after adjusting for minimal commissions).

The Lady Doth Imbibe Too Much…

Onward…!

It’s always wise to look at the fundamentals—if only to understand just how delirious stockholders are.

A glance at ORCL’s numbers reveals the following—

• First, P/E is 39.78, but…
• Analysts see that contracting to just 19.44 a year from now.  Call it half the price or twice the current earnings (just to keep the stock at the current price level).  Hmm…
• Dividend Yield is a shallow 1.31%, and…
• Price to Book is non-existent.  That is, the break-up value of the company is NIL because assets outweigh liabilities.
• EPS FELL this year by 47.00% (even though the company beat in its June 12^th announcement), and…
• Q/Q earnings were also LOWER by 18.90%.
• So whence the hoopla over the latest top and bottom line beats…?
• Only one more metric to consider before we look at insider sales, and it’s this—Return on Equity is a massively NEGATIVE 187.50%.  That’s because the company is not addressing its debt.  Shareholder equity has been in decline for a full five years.
• And maybe that explains why insiders are jumping.  Over the last six months, the company’s brain trust has unloaded $513 million in stock, with $473 million dumped in just the last 60 days.

Draw your own conclusions.

Here’s the chart—

We’ve a good feeling about this one, but, as always…

Everything depends upon Hashem,

Holy King of Heaven and Earth!

Many happy returns!

Matt McAbby

Follow @HughLOHaynew