In this article, the focus is on Oracle Corp’s DCF (Discounted Cash Flow) Analysis on the New York Stock Exchange under the ticker symbol ORCL. Unlike the traditional DCF model that uses future free cash flow, the GuruFocus DCF calculator uses EPS (Earnings Per Share) without INI as the default value for its analysis. The investigation shows that historically, share prices have been more correlated with earnings than free cash flow.
As of May 27, 2024, the calculated intrinsic value of Oracle Corp using the Discounted Earnings model is $67.49, while the current trading price is $122.91, indicating a safety margin of -82.12%. This suggests that the company is modestly overvalued. The DCF analysis uses a two-stage model consisting of the Growth Stage and the Terminal Stage. The model estimates the intrinsic value based on various assumptions and steps.
The calculations for the Intrinsic Value using the Discounted Earnings method involve determining the Growth Stage and the Terminal Stage based on assumptions such as EPS without INI, Discount Rate, Growth stage years, and Terminal stage years. The model calculates the intrinsic value to be $67.49. Additionally, GuruFocus also provides the calculation using the traditional free cash flow approach, which yields an intrinsic value of $50.28 based on Free Cash Flow per share.
It is important to note that while the DCF model is a robust valuation methodology, it relies on several assumptions that may impact the accuracy of the final intrinsic value calculation. Considerations when employing the DCF model include evaluating future earning potential, embracing growth, predictability, and selecting an appropriate discount rate.
Using GuruFocus’ All-in-One Analyzer, investors can search for stocks trading below their intrinsic value based on DCF models. Identifying undervalued predictable companies with a high predictability range can help focus on investments that are trading at a discount to their intrinsic value.
Overall, this article aims to provide general information about Oracle Corp’s intrinsic value analysis and is not personalized financial advice. The analysis is based on historical data and uses an unbiased methodology. Readers are encouraged to conduct their own research and consider their individual investment objectives and financial circumstances before making investment decisions.
Article Source
https://finance.yahoo.com/news/oracle-corp-exploration-intrinsic-value-120026163.html
