• In the cloud services space, profitability does not seem to matter anymore, while higher expected growth means everything.
• Oracle has taken a very different and more long-term oriented approach, which could easily make the company a superior investment.
• Oracle is still dominating in the enterprise applications segment and is moving fast to the cloud while not compromising profitability and increasing investments.
• Valuation remains very conservative, and the risk of downward multiple repricing is extremely low.

Source: gsmarena

So far, Oracle (NYSE:ORCL) seems to have been playing catch up with the high flying and exciting names in the cloud space. Oracle is considered a niche player in the Cloud Infrastructure (IaaS) space and Customer Relationship Management (CRM) and Human Capital Management (HCM) applications as well. However, ORCL is dominating the enterprise applications and database segments while also developing its cloud infrastructure, which will offer an important competitive advantage.

Due to its legacy business, the company's topline revenue does not appear to be growing at all. This is rather striking for most investors in an industry where, as we will see later, topline growth at whatever the price means everything.

Source: prepared by the author using data from Oracle annual and quarterly reports

This has led to a decade of disappointing performance relative to the overall market, the technology sector, and to the current leaders in the cloud infrastructure, platform, and software space.

Data by YCharts

After all, who wants to hold an old legacy business that has been late to the exciting cloud space, that has had flat revenues over the past decade and disappointing share price returns. Whether you are a small retail investor or a professional, it is very hard to justify buying a company with such a track record at times when share prices of high-growth companies are skyrocketing.

READ FULL ARTICLE HERE