Oracle's stock is trading at $80.21 a share. Technicals indicate more upside, but the financials of the company suggest otherwise.

Overview

The Austin, Texas-based Oracle Corporation is an American multinational company that specialises in computer technology. Based on sales and market capitalisation, Oracle was the third-largest software firm in the world in 2020. The business offers enterprise software, cloud-designed systems, database software and technologies (especially under its own trademarks). It is a part of the S&P 500 index.

Financials

Looking at the financial year that ended in May 2022 versus 2021. Revenue grew by $2bn and gross profit grew by £1bn. After operating expenses and taxes in 2022, the net income came in at $6.7bn, which was a 51% decline from the previous year. EBITDA also saw a decline of $4bn year-on-year, as a result, earnings per share in 2022 came in at $2.41 versus $4.55 in 2021. Furthermore, total liabilities fell by $10bn but total assets also fell by $22bn, while cash on hand dropped by almost 53% YoY. Due to this, shareholder equity came in at $-5.8bn in 2022 versus $5.9bn in 2021.

Technicals

From a technical overview, Oracle’s shares are currently trading at $80.21 a share. Applying the Fibonacci retracement to the chart, support sits at $77.75 (38.2% fib) and then at $71.05 (23.6% fib). A break below the 38.2% and 23.6% Fibonacci retracements could see the share price slide towards the major support level at $60.24 (0% fib). Although, this would be more likely in the long term. Towards the upside, a key resistance level sits at $83.16 (50% fib). A break above this point may see the stock’s price head towards the 61.8% fib ($88.57) and then the 76.4% fib ($95.26). This is more likely in the mid/long term. Looking at the technical indicators, MACD is currently positive and so is RSI as it reads 56.

Summary

On the basis of the technicals, the support is established with various key levels resting below. Indicators are currently both positive, suggesting that there could be more upside in the near future. However, a vital factor to consider when investing in this stock is the company's financials. Oracle has reported huge financial falls in 2022 compared to 2021, its total liabilities outweigh the total assets leaving the equity in a negative figure. Its cash-on-hand pile has also decreased over 50% YoY, and unless the company starts to show greater improvements within the next few earnings reports, it could be a risky stock in the longer term. Overall, investors should be wary as in the short-term, technicals suggest there could be room for more upside. However, in the longer term, the financials suggest the stock’s share price may fall. The company is set to release some earnings today.