What is ORCL's Intrinsic value?

Oracle Corp (ORCL) Intrinsic Value Analysis

Executive Summary

As of April 2, 2026, Oracle Corp's estimated intrinsic value ranges from $27.27 to $218.81 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $188.56 +29.8%
Discounted Cash Flow (5Y) $168.96 +16.3%
Dividend Discount Model (Multi-Stage) $112.89 -22.3%
Dividend Discount Model (Stable) $218.81 +50.7%
Earnings Power Value $27.27 -81.2%

Is Oracle Corp (ORCL) undervalued or overvalued?

With the current market price at $145.23, the stock appears to be fairly valued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Oracle Corp's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.53 1.09
Cost of equity 6.3% 11.0%
Cost of debt 4.0% 4.9%
Tax rate 9.2% 11.4%
Debt/Equity ratio 0.24 0.24
After-tax WACC 5.8% 9.7%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $57,399 (FY05-2025) to $107,386 (FY05-2035)
  • Net profit margin expansion from 22% to 29%
  • Capital expenditures maintained at approximately 17% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $169 $588,343M 85.6%
10-Year Growth $189 $644,711M 72.1%
5-Year EBITDA $229 $762,426M 88.9%
10-Year EBITDA $243 $802,609M 77.6%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 35.1%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.6%
  • Long-term growth rate: 4.0%
  • Fair value: $112.89 (-22.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.0% (Low) to 6.3% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $50 to $388
  • Selected fair value: $218.81 (50.7% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $13,110M
Discount Rate (WACC) 9.7% - 5.8%
Enterprise Value $135,326M - $226,311M
Net Debt $102,400M
Equity Value $32,926M - $123,911M
Outstanding Shares 2,876M
Fair Value $11 - $43
Selected Fair Value $27.27

Key Financial Metrics

Metric Value
Market Capitalization $417689M
Enterprise Value $520089M
Trailing P/E 25.77
Forward P/E 28.44
Trailing EV/EBITDA 22.85
Current Dividend Yield 141.61%
Dividend Growth Rate (5Y) 11.55%
Debt-to-Equity Ratio 0.24

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $56.57
Discounted Cash Flow (5Y) 25% $42.24
Dividend Discount Model (Multi-Stage) 20% $22.58
Dividend Discount Model (Stable) 15% $32.82
Earnings Power Value 10% $2.73
Weighted Average 100% $156.93

Investment Conclusion

Based on our comprehensive valuation analysis, Oracle Corp's intrinsic value is $156.93, which is approximately 8.1% above the current market price of $145.23.

Key investment considerations:

  • Strong projected earnings growth (22% to 29% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.24)
  • Historical dividend growth of 11.55%

Given these factors, we believe Oracle Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.