Head-To-Head Review: RingCentral (RNG) & Oracle (ORCL)

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

Profitability

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

Net Margins Return on Equity Return on Assets
RingCentral -5.80% -17.97% -9.86%
Oracle 25.48% 20.49% 8.38%

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RingCentral $379.72 million 10.34 -$29.30 million ($0.36) -140.97
Oracle $37.73 billion 5.28 $9.34 billion $2.33 20.64

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

Institutional & Insider Ownership

76.1% of RingCentral shares are held by institutional investors. Comparatively, 57.9% of Oracle shares are held by institutional investors. 14.5% of RingCentral shares are held by company insiders. Comparatively, 29.0% of Oracle shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Oracle pays an annual dividend of $0.76 per share and has a dividend yield of 1.6%. RingCentral does not pay a dividend. Oracle pays out 32.6% of its earnings in the form of a dividend. RingCentral has increased its dividend for 6 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for RingCentral and Oracle, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RingCentral 0 3 11 0 2.79
Oracle 0 9 27 0 2.75

RingCentral presently has a consensus price target of $44.62, suggesting a potential downside of 12.09%. Oracle has a consensus price target of $55.53, suggesting a potential upside of 15.46%. Given Oracle’s higher probable upside, analysts clearly believe Oracle is more favorable than RingCentral.

Volatility & Risk

RingCentral has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Oracle has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Summary

Oracle beats RingCentral on 12 of the 17 factors compared between the two stocks.

About RingCentral

RingCentral, Inc. is a provider of software-as-a-service (SaaS) solutions for businesses to support modern communications. The Company’s cloud-based business communications solutions provide a single user identity across multiple locations and devices, including smartphones, tablets, personal computers (PCs) and desk phones, and allow for communication across multiple channels, including high definition (HD) voice, video, short messaging service (SMS), messaging and collaboration, conferencing, online meetings, and fax. The Company’s products include RingCentral Office, RingCentral Professional, RingCentral Fax, RingCentral Contact Center and RingCentral Glip. RingCentral Office is a multi-user, enterprise-grade communications solution. RingCentral Professional is an inbound call routing subscription with additional text and fax capabilities targeting smaller deployments, and RingCentral Fax is an Internet fax subscription that permits sending and receiving faxes over the Internet.

About Oracle

Oracle Corporation (Oracle) provides products and services that address all aspects of corporate information technology (IT) environments, including application, platform and infrastructure. The Company’s businesses include cloud and on-premise software, hardware and services. Its cloud and on-premise software business consists of three segments, including cloud software and on-premise software, which includes Software as a Service (SaaS) and Platform as a Service (PaaS) offerings, cloud infrastructure as a service (IaaS) and software license updates and product support. Its hardware business consists of two segments, including hardware products and hardware support. The Company’s services business includes the remainder of the Company’s segments. Its services business includes activities, such as consulting services, enhanced support services and education services, among others.

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