Earnings Previews: Oracle, Planet Labs

The three major U.S. equity indexes closed higher Thursday. The Dow Jones industrials ended the day up 0.61%, the S&P 500 rose by 0.66% and the Nasdaq added 0.6%. Eight of 11 sectors ended the day with gains ranging from 1.8% (financials) to 0.3% (real estate). Consumer staples was the day’s biggest loser with a 0.3% retreat. The euro and the British pound both added strength Thursday after the European Central Bank raised interest rates by 0.75%. All three major indexes traded higher ahead of Friday’s opening bell.

After markets closed Thursday, DocuSign reported quarterly results that beat estimates on both the top and bottom lines. The company reaffirmed fiscal year guidance and issued guidance for the current quarter that is in line with consensus estimates. Shares traded up more than 16% in Friday’s premarket.

Before markets opened on Friday, Ideanomics reported revenue that missed the consensus estimate and the loss per share was larger than in the year-ago quarter. Shares traded down by about 13% in early action Friday.

Kroger also beat top-line and bottom-line estimates when it reported quarterly results early Friday. The stock was up more than 4.5% in premarket trading.

No significant reports are due late Friday or before markets open on Monday. Here is a look at what to expect from two companies reporting results after markets close on Monday.

Oracle

Software and cloud-computing giant Oracle Corp. (NYSE: ORCL) has dropped about 16.6% from its share price over the past 12 months. Since reaching an all-time high in mid-December, the share price has declined by about 27%.

Oracle’s balance sheet carries $57.6 billion in net debt following the company’s merger with Cerner, about $20 billion more than 12 months ago. Free cash flow for the past 12 months is around $5 billion, a sharp drop from $13.75 billion 12 months ago. Oracle recently laid off an unspecified (but large) number of its 143,000 employees, temporarily pushing the share price higher.

Of 29 analysts covering the stock, nine have a Buy or Strong Buy rating and 18 have a Hold rating. At a recent price of around $74.70 a share, the upside potential based on a median price target of $82.00 is about 9.8%. At the high price target of $115.00, the upside potential is 53.9%.

Fiscal first-quarter revenue is forecast at $11.45 billion, which would be down 3.3% sequentially but up 17.7% year over year. Adjusted earnings per share (EPS) are pegged at $1.08, down 30.2% sequentially and up 4.9% year over year. For the full 2023 fiscal year ending in May, current estimates call for EPS of $5.25, up 7.2%, on sales of $49.79 billion, up 17.3%.

Oracle stock trades at 14.2 times expected 2023 EPS, 12.6 times estimated 2024 earnings of $5.90 and 11 times estimated 2025 earnings of $6.80 per share. The stock’s 52-week range is $63.76 to $106.34. The company pays an annual dividend of $1.28 (yield of 1.7%). Total shareholder return for the past year is negative 15.3%.

Planet Labs

Planet Labs PBC (NYSE: PL) designs, builds and launches constellations of satellites that deliver high-cadence geospatial data to customers worldwide. The company completed a SPAC merger in early December, and the shares have dropped by nearly 52% since. Planet Labs recently was selected to demonstrate real-time space connectivity solutions for low-earth orbit satellites as part of a NASA plan to replace the agency’s owned and operated satellites with a commercial network.

All six analysts covering the stock have a Buy or Strong Buy rating. At a share price of around $5.20, the upside potential based on a median price target of $9.50 is 82.7%. At the high price target of $12.00, the upside potential is about 131%.

Revenue for the second quarter of fiscal 2023 is forecast at $42.8 million, up about 5.9% sequentially. Analysts are forecasting an adjusted loss of $0.11 per share, compared to a loss of $0.09 per share in the prior quarter. For the full fiscal year ending in January, Planet Labs is expected to post a loss of $0.40 per share, down from the year-ago loss of $1.70, on sales of $181.90 billion, up 38.6%.

Planet Labs is not expected to post a profit in 2023 or 2024. The company’s enterprise value to sales multiple for 2023 is 5.1. For 2024, the multiple is 3.5. The stock’s post-IPO range is $3.70 to $11.65 (prior to the IPO, the SPAC stock reached a high of $12.15 in November after announcing the deal with Planet Labs). Total shareholder return for the past 12 months is negative 47.6%.

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