Even though threats related to data security, especially on cloud-based platforms, continue to plague the enterprise software industry, the sector is nevertheless expected to grow rapidly in the coming months owing to increasing demand from almost every industry as part of their digital transformation efforts.
In addition, because hybrid working is gaining popularity, the demand for enterprise software solutions should keep rising. According to Statista, the revenue in this sector is stated to grow at an 8.9% CAGR by 2026.
Oracle Corporation (ORCL)
Redwood City, Calif.-based ORCL provides products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offers several cloud software applications.
On September 13, 2021, Oracle CEO, Safra Catz, said, “Oracle’s two new cloud businesses, IaaS and SaaS, are now over 25% of our total revenue with an annual run rate of $10 billion. Taken together, IaaS and SaaS are Oracle’s fastest-growing and highest margin new businesses. As these two cloud businesses continue to grow, they will help expand our overall profit margins and push earnings per share higher.”
ORCL’s total revenues increased 3.9% year-over-year to $9.73 billion for its fiscal 2022 first quarter, ended August 31, 2021. The company’s operating income came in at $3.43 billion, representing a 6.7% year-over-year rise. Its net income increased 9.2% year-over-year to $2.46 billion. Also, its EPS came in at $0.86, up 19.4% year-over-year.
For its fiscal year 2022, analysts expect ORCL’s revenue to be $42.25 billion, representing a 4.4% year-over-year rise. The company’s EPS is expected to increase 10% year-over-year to $5.16 in its fiscal year 2023. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 53.5% to close yesterday’s trading session at $95.33.
ORCL’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its weighting.
Also, the stock has a B grade for Value, Sentiment, Stability, and Quality. Within the Software-Application industry, it is ranked #5 out of 163 stocks. Click here to see the additional POWR Ratings for Growth and Momentum for ORCL.
SAP SE (SAP)
Headquartered in Walldorf, Germany, SAP operates as an enterprise application software company worldwide. The company operates through four segments: Applications-Technology & Support; Concur; Qualtrics; and Services.
On November 8, SAP unveiled its SAP Responsible Design and Production, a solution for designing products sustainably and transitioning to a circular economy. Andrew Morlet, CEO, Ellen MacArthur Foundation, said, “Digital solutions play an important role in transitioning to a circular economy. They enable businesses to embed circular practices across their operations, from designing products to reduce waste from the outset to track the lifecycle of the materials they use.”
SAP’s total revenue increased 4.7% year-over-year to €6.84 billion ($7.75 billion) in the third quarter, ended September 30, 2021. Its gross profit came in at €4.89 billion ($5.53 billion), representing a 5.2% year-over-year rise. Its total current assets came in at €16.93 billion ($19.16 billion), for the period ended September 30, 2021, compared to €15.07 billion ($17.06 billion), for the period ended December 31, 2020.
For its fiscal year 2022, SAP’s revenue is expected to grow 4.5% year-over-year to $32.72 billion. Its EPS is expected to grow 7.8% year-over-year to $6.89 in its fiscal year 2021. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 12.4% in price to close yesterday’s trading session at $141.97.
SAP’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which equals a Strong Buy in our proprietary rating system.
In addition, it has an A grade for Sentiment and a B grade for Value, Stability, and Quality. It is ranked #9 in the Software-Application industry. Click here to see the additional POWR Ratings for SAP (Growth and Momentum).
Autodesk, Inc. (ADSK)
ADSK provides 3D design, engineering, and entertainment software and services worldwide. Its technology spans architecture, engineering, construction, product design, manufacturing, media & entertainment – empowering innovators to solve challenges. ADSK is headquartered in San Rafael, Calif.
On October 5, ADSK announced powerful new capabilities across its Autodesk Construction Cloud, delivering new ways for construction teams to connect workflows on one platform. Sameer Merchant, vice president of product development, Autodesk Construction Solutions, said, “Since we launched Autodesk Construction Cloud, we have been focused on connecting office and field teams and enabling easier collaboration from a single source of truth.”
For the fiscal year 2022 second quarter, ended July 31, 2021, ADSK’s total net revenue increased 16.1% year-over-year to $1.06 billion. The company’s gross profit came in at $954.3 million, up 14.7% year-over-year. Its net income was $115.6 million, up 17.7% year-over-year. And its EPS came in at $0.52, up 18.2% year-over-year.
ADSK’s revenue is expected to be t $5.20 billion in its fiscal year 2023, representing a 19% year-over-year rise. The company’s EPS is expected to increase 41% year-over-year to $7.02 in the next year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 30.8% to close yesterday’s trading session at $330.55.
It is no surprise that ADSK has an overall B rating, which equals a Buy in our proprietary rating system. In addition, it has an A grade for Quality, and a B grade for Sentiment.
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ORCL shares were trading at $94.09 per share on Thursday morning, down $1.24 (-1.30%). Year-to-date, ORCL has gained 47.69%, versus a 26.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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