Oracle (Nasdaq:ORCL) announced its results for the most recent quarter on September 20, 2012. Oracle develops, manufactures, markets, distributes, and services software designed to help its customers manage and grow their businesses.

Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: Everything Investors Need To Know About Earnings

The Numbers: Oracle fell short of estimates with 41 cents per share and revenues of $8.18 billion. Analysts were expecting 51 cents per share and revenues of $8.45 billion. EPS rose 13.9% while revenue declined 2.3% from the same period last year. Slumping revenue in the last quarter ends Oracle's streak of four consecutive quarters of revenue increases. Net income for the first quarter was $2.03 billion. According to the reported number, this is up 10.5% from last year's figures. Last quarter marked the third in a row of rising net income.

Management Quote: "On a non-GAAP basis, new software licenses and cloud software subscriptions sales grew 11% in constant currency and operating margin increased to 44% in Q1," said Oracle President and CFO, Safra Catz. "Q1 operating cash flow increased to a record high of $5.7 billion. We're off to a good start in the new year."

A Look Back: Net income has increased 17.9% year-over-year on average across the last five quarters. The biggest gain came in the first quarter of the last fiscal year, when income climbed 36.1% from the year-earlier quarter.

Looking Ahead: When earnings estimates stay consistent leading up to earnings season, this usually shows analysts accurately predicted earnings estimates and business is stable. Be cautious though as this may also be a warnings sign that earnings could come at a huge surprise to the upside or downside as analyst did not correctly predict earnings. Steady earnings estimates mean there is not enough change going on with the company to make analysts change their opinions. When earning estimates are steady, investors can look at the revenue trend for a more fundamental indicator. The average estimate for the fiscal year has seen a bump from $2.55 per share 60 days ago to $2.56.

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Tickers in this Article: ORCL

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