Critical Analysis: Zuora (NYSE:ZUO) and Oracle (NYSE:ORCL)

Oracle (NYSE:ORCL) and Zuora (NYSE:ZUO) are both computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, earnings, valuation, risk and dividends.

Institutional and Insider Ownership

42.9% of Oracle shares are owned by institutional investors. Comparatively, 67.0% of Zuora shares are owned by institutional investors. 39.1% of Oracle shares are owned by insiders. Comparatively, 12.6% of Zuora shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Oracle and Zuora’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Oracle $40.48 billion 5.79 $13.75 billion $3.45 25.42
Zuora $305.42 million 6.52 -$73.17 million ($0.68) -23.51

Oracle has higher revenue and earnings than Zuora. Zuora is trading at a lower price-to-earnings ratio than Oracle, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Oracle and Zuora, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oracle 1 16 8 0 2.28
Zuora 0 2 3 0 2.60

Oracle currently has a consensus target price of $95.91, indicating a potential upside of 9.37%. Zuora has a consensus target price of $21.00, indicating a potential upside of 31.33%. Given Zuora’s stronger consensus rating and higher probable upside, analysts plainly believe Zuora is more favorable than Oracle.

Profitability

This table compares Oracle and Zuora’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Oracle 24.79% 1,087.71% 10.90%
Zuora -24.76% -45.14% -18.84%

Risk & Volatility

Oracle has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, Zuora has a beta of 2.17, indicating that its share price is 117% more volatile than the S&P 500.

Summary

Oracle beats Zuora on 9 of the 14 factors compared between the two stocks.

About Oracle

Oracle Corp. engages in the provision of products and services that address all aspects of corporate information technology environments. It operates through the following business segments: Cloud and License, Hardware, and Services. The Cloud and License segment markets, sells, and delivers applications, platform, and infrastructure technologies. The Hardware segment provides hardware products and hardware-related software products including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware related software, and related hardware support. The Services segment offers consulting, advanced support, and education services. The company was founded by Lawrence Joseph Ellison, Robert Nimrod Miner, and Edward A. Oates on June 16, 1977 and is headquartered in Austin, TX.

About Zuora

Zuora, Inc. engages in the provision of cloud-based subscription management platform. Its products include Zuora Billing, Zuora Revenue, Zuora CPQ, Zuora Collect AI, and Zuora Analytics. It offers solutions to software, healthcare, education, B2C, and communications industries. The company was founded in 2007 by K.V. Rao, Cheng Zou and Tien Tzuo and is headquartered in Redwood City, CA.

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