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ETFs in Focus Post Oracle's Q4 Earnings

·4-min read

After the closing bell yesterday, software giant Oracle ORCL reported strong fiscal fourth-quarter 2021 results. The company beat the Zacks Consensus Estimate for both earnings and revenues, and showed its best revenue growth in six years. It also offered solid revenue guidance for the ongoing quarter.

Earnings per share came in at $1.54, beating the Zacks Consensus Estimate of $1.31 and improving 29% from the year-ago quarter. Revenues rose 8% year over year to $11.2 billion, slightly above the estimated $11.1 billion. This marks the fourth consecutive quarter of revenue growth after two consecutive fiscal years of declining sales (see: all the Technology ETFs here).

Revenues from the two strategic cloud applications businesses — Fusion and NetSuite Cloud ERP applications — grew 46% and 22%, respectively, during the quarter. Notably, Oracle Fusion is the world's biggest cloud ERP business while Oracle NetSuite is the world's second-biggest cloud ERP business.

Oracle offered an upbeat guidance for the ongoing quarter. It expects revenues to grow 3-5% and adjusted earnings in the range of 94-98 cents per share. Revenue growth forecast at the mid-point is above the Zacks Consensus Estimate, which projects growth of 3.4% while the mid-point of earnings per share guidance is below the Zacks Consensus Estimate of $1.03.

Oracle shares dropped about 5% in after-market hours on weak guidance. The company carries a Zacks Rank #3 (Hold) and has a VGM Score of B. It belongs to a bottom-ranked Zacks Industry (bottom 26%).

ETFs in Focus

ETFs with the highest allocation to this software giant are in focus post Oracle results. Below we have highlighted them:

iShares Expanded Tech-Software Sector ETF IGV

This ETF provides exposure to software companies in the technology and communication services sectors by tracking the S&P North American Expanded Technology Software Index. The fund holds a basket of 109 securities with Oracle taking the fourth spot at 6.4% of total assets. It is popular with AUM of $5.1 billion and volume is good as it exchanges nearly 1 million shares a day. The product charges 46 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 7 Tech ETFs That Survived the Recent Turmoil).

Invesco BuyBack Achievers ETF PKW

This ETF follows the NASDAQ US BuyBack Achievers Index, which comprises U.S. securities issued by corporations that have led to a net reduction in shares outstanding of 5% or more in the trailing 12 months. It holds a basket of 109 stocks with Oracle taking the second position at 5.4% allocation. PKW has accumulated $2.1 billion in its asset base and trades in an average daily volume of 236,000 shares. It charges 62 bps in annual fees.

Invesco Dynamic Software ETF PSJ

This product follows the Dynamic Software Intellidex Index, holding 32 securities in its basket. Out of these, Oracle is the third firm accounting for 4.9% share. The fund has amassed $605.1 million in its asset base and trades in an average daily volume of under 17,000 shares. Expense ratio came in at 0.56%. PSJ has a Zacks ETF Rank #3 with a High risk outlook.

First Trust NASDAQ Technology Dividend Index Fund TDIV

This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $1.6 billion in its asset base and trades in a moderate volume of about 57,000 shares per day. The ETF charges 50 bps in annual fees and holds about 79 securities in its basket. Of these firms, ORCL occupies the sixth position, making up 4.5% of the assets (read: Dividend Hikes Are Back: Buy These ETFs).

First Trust Cloud Computing ETF SKYY

This fund provides exposure to cloud-computing securities by tracking the ISE Cloud Computing Index. Holding about 66 stocks in the basket, Oracle takes the second spot at 4.5%. The product has been able to manage $6.2 billion in its asset base while seeing a good volume of about 267,000 shares a day. It has 0.60% in expense ratio and a Zacks ETF Rank #3 with a Medium risk outlook.

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Oracle Corporation (ORCL) : Free Stock Analysis Report
 
Invesco BuyBack Achievers ETF (PKW): ETF Research Reports
 
First Trust NASDAQ Technology Dividend ETF (TDIV): ETF Research Reports
 
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
 
iShares Expanded TechSoftware Sector ETF (IGV): ETF Research Reports
 
Invesco Dynamic Software ETF (PSJ): ETF Research Reports
 
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