When it comes to databases, Oracle (NYSE: ORCL) has been one of the leading technology companies in the industry over the long run. The company has taken advantage of the need to manage data for decades, and the stock has generated average annual returns of more than 23% over the past 30 years. Yet for more than half of that period, Oracle hasn't given investors the reward of a stock split, and some now wonder if the company will ever do another split of its shares. Below, we'll look at Oracle's past history of stock splits to see what the future might bring.
Image source: Oracle.
Oracle stock splits in the past
Here are the dates and split ratios for the stock splits Oracle has done in the past:
Data source: Oracle investor relations.
As you can see, Oracle has a long history of stock splits. Yet the company is anything but typical when it comes to when it decides to make those moves, and that history makes it extremely difficult to predict whether another stock split will come anytime soon.
For one thing, Oracle hasn't hesitated to make splits in close succession. During its first couple of years as a publicly traded stock, Oracle did two two-for-one stock splits within nine months of each other in 1987. That happened despite the fact that the stock hadn't climbed above $44 per share in the first case, or above $38 in the second one. Subsequently, Oracle did its 1989 split with the stock just barely climbing into the low $30s. That was a big departure from the usual practice of waiting for triple-digit stock prices before doing splits.
In the 1990s, Oracle had a bit more patience, but not as much as most of its peers. Shares climbed into the mid-$60s before Oracle made its 1993 two-for-one split. But the following three-for-two splits came with greater frequency, and share prices only had to approach the $50 mark in some cases before Oracle would split its shares again.
Only once did Oracle let its stock climb into triple digits, and that lasted only for a couple of months. The early 2000 culmination of the tech boom sent Oracle stock soaring to then-record levels, and the database leader held up well even as other tech companies started to sag, prompting another split that would prove to be its last.
Why did Oracle stop splitting its stock?
After 2000, Oracle struggled. The stock price lingered in the single digits during much of 2002, and as recently as 2004, shares occasionally traded below $10. The financial crisis put the brakes on the slow recovery in Oracle's stock, and only after the recession had run its course did Oracle shareholders enjoy lasting gains.
Even now, though, Oracle still hasn't fully returned to the kind of share-price appreciation it enjoyed during the 1990s tech boom. With the stock trading around $40 per share, it's hard to argue that there's any imminent need for Oracle to do a stock split.
Will Oracle ever do a stock split again?
What will determine whether Oracle splits its shares in the future is how well it can perform. At this point, Oracle is working hard to maximize its exposure to the cloud-computing revolution, and CEO Larry Ellison believes Oracle will beat its competitors to key milestones of cloud-related activity. With growth of nearly 50% during the 2016 fiscal year, the tech giant hopes the runway for future gains will be long. Given the breadth of Oracle's offerings, including human capital management and enterprise resource planning, Ellison and his team think accelerating growth is a distinct possibility.
Obviously, Oracle doesn't have the industry to itself, and competitors are taking aim at its early success. Yet Oracle's foundation in databases gives it an advantage some cloud players don't have. The company will have to fight in order to win, but Oracle does have key opportunities that could drive future share-price growth.
Oracle investors shouldn't expect a stock split anytime soon. In the long run, though, the database giant is likely to see enough share-price appreciation to make a future split make a lot more sense than it would now.
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