Editing Oracle Corporation
The edit can be undone. Please check the comparison below to verify that this is what you want to do, and then publish the changes below to finish undoing the edit.
Latest revision | Your text | ||
Line 947: | Line 947: | ||
== Comparable Company Analysis == | == Comparable Company Analysis == | ||
Our second method for valuing Oracle was comparable company analysis. Price/earnings, Enterprise Value/EBITDA, and Enterprise Value/Revenue ratios were used. The companies selected were the direct competitors, as mentioned above. | Our second method for valuing Oracle was comparable company analysis. Price/earnings, Enterprise Value/EBITDA, and Enterprise Value/Revenue ratios were used. The companies selected were the direct competitors, as mentioned above. | ||
[[File:Screenshot 2023-08-23 3.jpg|thumb| | [[File:Screenshot 2023-08-23 3.jpg|thumb|989x989px|Comparables table]] | ||
To begin, the EV/Sales metric was employed. This involved taking the revenue from the past year and multiplying it by the median EV/Sales ratio of competing firms. As a result, the estimated enterprise value stood at $278,895 million. After accounting for net debt, it became evident that the equity value equated to $193,752 million or $71.38 per share. Consequently, based on this ratio, the company appears to be overvalued compared to its peers. | To begin, the EV/Sales metric was employed. This involved taking the revenue from the past year and multiplying it by the median EV/Sales ratio of competing firms. As a result, the estimated enterprise value stood at $278,895 million. After accounting for net debt, it became evident that the equity value equated to $193,752 million or $71.38 per share. Consequently, based on this ratio, the company appears to be overvalued compared to its peers. | ||
Line 975: | Line 975: | ||
The company's debt level is really high compared to its competitors, which can be seen by its debt to equity and debt to capital ratios. This is a result of its share repurchase program as well as the aggressive acquisition strategy which involves a lot of debt. The company might have to suspend its repurchase program or reduce its capital expenditures in order to be able to reduce its debt levels. S&P has assigned a credit rating of BBB, which is low when compared to its competitors (e.g. Microsoft, Salesforce). Such a low credit rating can potentially lead to higher cost of debt moving forward<ref name=":0" />. | The company's debt level is really high compared to its competitors, which can be seen by its debt to equity and debt to capital ratios. This is a result of its share repurchase program as well as the aggressive acquisition strategy which involves a lot of debt. The company might have to suspend its repurchase program or reduce its capital expenditures in order to be able to reduce its debt levels. S&P has assigned a credit rating of BBB, which is low when compared to its competitors (e.g. Microsoft, Salesforce). Such a low credit rating can potentially lead to higher cost of debt moving forward<ref name=":0" />. | ||
<references /> | <references /> |