Salesforce Vs. Oracle: Which Stock Is The Better Buy?
Zacks Investment Research | May 23, 2017 12:43AM ET
As the technology sector continues its full-blown shift to cloud computing, investors interested in this space tend to run into the same few names. We all know about Amazon (NASDAQ:AMZN) and its profit-driving Web Services unit, and there’s been plenty said about Microsoft’s (OTC:MFST) Azure division.
Today, we’re going to be looking at two of the other cloud computing leaders: Oracle (NYSE:ORCL) and Salesforce (NYSE:CRM) .
Of course, these competitors have much different stories. As we know, Oracle is a software behemoth and has a massive footprint in several markets, while Salesforce—founded by former Oracle executive Marc Benioff—is the cloud-based CRM king.
Nevertheless, the two companies directly compete in the customer relationship and enterprise computing spaces, and the love-hate rivalry between their two top executives has been well documented over the years.
And if an investor can find room for both of these cloud giants in their portfolio, I say more power to them. But for those who are looking for just one cloud stock right now, let’s put Salesforce and Oracle head-to-head to see which one comes out on top.
Head-to-Head
As we jump into our head-to-head comparison of Salesforce and Oracle, let’s take a look at some key metrics for both of these stocks:
As you can see right off the bat, Oracle has the edge in our key Zacks metrics. Thanks to an earnings beat in its most recent quarter, as well as one positive full-year earnings estimate revision within the last 60 days, Oracle has moved up to a Zacks Rank #2 (Buy).
And while neither stock has very impressive VGM grades, Oracle has the slight edge. Trend-focused investors should not that Oracle has “B” grades for both Value and Momentum. On the other hand, Salesforce has a “B” grade for Growth.
On the topic of growth, we see some interesting figures here. For Oracle, it’s clear that the company is at a point where year-over-year comparisons will be challenging. However, investors should note that the company’s current fiscal year is up in May. Looking ahead, we expect to see earnings growth of 8.5% on sales growth of 3% next year.
For Salesforce, the sales growth is clearly still there, but as has always been the case for the company, earnings are a slight concern. Salesforce has historically struggled to turn a GAAP profit, but its attractiveness as a growth stock is boosted by its consistent revenue gains.
Get The News You Want
Based on the Zacks metrics, we’ll have to give Oracle the nod here. But remember that the Zacks Rank is a 1-3 month indicator, and in the long term, both of these companies stand to benefit from their dominant positions in the cloud computing space.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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