Is Oracle Stock A Buy At $190?

Core Insights - Oracle's fourth-quarter results exceeded Wall Street expectations with earnings of $1.70 per share and sales of $15.9 billion, surpassing consensus estimates of $1.64 and $15.6 billion respectively [2] - The growth in cloud services, particularly cloud infrastructure, was a significant driver, with a 52% increase in Q4 and a projected 70% growth for fiscal year 2026 [2] - Following the positive results, Oracle's stock rose 8% to approximately $190 in extended trading [2] Financial Performance - Oracle's revenues have shown notable growth, with a 10.7% average annual increase over the last three years compared to 5.5% for the S&P 500 [8] - In the last 12 months, revenues grew 8.4% from $53 billion to $57 billion, while quarterly revenues increased 11% to $16 billion from $14 billion a year ago [8] - The company reported an operating income of $18 billion, resulting in a high operating margin of 30.8% [15] Valuation Metrics - Oracle's price-to-sales (P/S) ratio stands at 9.5, significantly higher than the S&P 500's 3.0, and its price-to-earnings (P/E) ratio is 43.7 compared to the benchmark's 26.4 [8] - The current P/S ratio of 9.5 is above Oracle's three-year average of 6.6, reflecting a justified increase in valuation due to strong growth prospects [12] Financial Stability - Oracle's balance sheet is described as neutral, with a debt figure of $104 billion and a market capitalization of $494 billion, resulting in a moderate debt-to-equity ratio of 21.0% [15] - Cash and cash equivalents amount to $11 billion out of total assets of $168 billion, leading to a cash-to-assets ratio of 6.7% [15] Resilience During Downturns - Oracle's stock has shown resilience during market downturns, outperforming the S&P 500 in several recent crises [11][16] - The stock fully recovered from significant declines during past market crises, indicating strong recovery potential [16]