It’s Late In The Earnings Cycle, But Adobe And Oracle Both Report Next Week - How Do They Look?

The earnings season is winding down and the next one will be starting early next month, but there are still a few widely-held stocks that haven’t reported yet. Two major software companies will report next week and both stocks have performed well in recent years. Oracle (ORCL) is scheduled to report on Tuesday, June 15, and Adobe (ADBE) is scheduled to report on Thursday, June 17.

If we look at the weekly charts for both companies, Oracle has outperformed Adobe over the last four months with Oracle gaining 33.5% since February 9 while Adobe is only up 2.65%. Unfortunately for Oracle, the rally has put the stock in overbought territory based on the 10-week RSI and the weekly stochastic indicators. The stock is up right at 50% over the last seven months and the trend has been pretty steady to the upside.

Adobe hasn’t fared as well with the stock seemingly caught in a range between $425 and $525 over the last 10 months. The stock has rallied off of its March low and is up around 21% in the last three months.

We see that the overbought/oversold indicators for Adobe aren’t nearly as high as those for Oracle and that could potentially help the stock as it tries to break through the $525 level. The stock first approached the price level last August and it did trade above it but wasn’t able to close a week above $525. The stock did close above that price in April, but only by $0.44.

Adobe Has Outperformed Oracle On The Fundamental Side

If we look at some of the key metrics for these two firms, Adobe has outperformed Oracle in most categories. The table below shows the earnings growth rates, the sales growth rates, the profitability measurements, and the expected earnings growth rates for each company.  

As you can see, Adobe’s figures are better in every category but one, Oracle’s return on equity is better than Adobe’s. Most of these stats are backward-looking as opposed to forward-looking and that might explain why Oracle’s stock has been able to outperform Adobe over the past year. But when we look at the forecast for the upcoming report, for 2021, and for 2022, Adobe is still expected to see greater earnings growth than Oracle. What this tells me is that the expectations for Adobe were/are greater than the expectations for Oracle.

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