4 Software Stocks to Buy for June Earnings

The software industry’s promising outlook is driven by rising spending on public cloud services and companies prioritizing scalable cloud solutions, blockchain, artificial intelligence and low-code development. Moreover, emerging trends such as Internet of Behavior, Total Experience, edge computing, AR/VR and DevOps are also shaping the future of the industry.

In this situation, investors could consider buying shares of high-quality software companies Oracle Corporation (ORCL), ZoomInfo Technologies Inc. (ZI), Amdocs Limited (DOX) and Creative Realities, Inc. (CREX) for solid gains in June.

Business applications are popular for increasing productivity, improving customer management, analyzing data, and streamlining processes. The software industry is evolving with a focus on advanced solutions spanning automation, cybersecurity, data analytics and digitalization to improve efficiency and knowledge. The global business software market is expected to grow at a CAGR of 11.9% by 2030.

As a result, growing investments in mobile applications, especially mobile games, everyday tools, unified solutions, innovative monetization methods and expanded Internet access are driving the further development of the software industry. Gartner forecasts global IT spending to increase 8% to $5.06 trillion in 2024, with software spending increasing 13.9% to $1.04 trillion.

Moreover, the software market is expected to grow at a CAGR of 5.3% during 2024–2028. Investor interest in software stocks is evident from the iShares Expanded Tech-Software Sector ETF’s (IGV) return of 34.4% over the past year.

With these favorable trends in mind, let’s analyze the basic aspects of the four software choices mentioned above.

Oracle Corporation (ORCL)

ORCL offers products and services for enterprise information technology environments around the world. The company provides cloud applications, cloud-based industry solutions, application licensing, infrastructure technologies, databases, Java, middleware, hardware products, and customer consulting and services.

In terms of leveraged FCF margin for the trailing 12 months, the ORCL of 23.01% is 129.6% higher than the industry average of 10.02%. Similarly, the trailing 12-month EBIT margin of 29.15% is 515% higher than the industry average of 4.74%. Additionally, the company’s stock trailing 12-month net profit margin of 20.27% is 662.1% higher than the industry average of 2.66%.

For the fiscal third quarter ended February 29, 2024, ORCL’s total revenues increased 7.1% year-over-year to $13.28 billion. Non-GAAP operating income increased 11.7% from a year ago to $5.79 billion. Additionally, the company’s non-GAAP net income and non-GAAP EPS increased 17.7% and 15.6% from the prior-year quarter to $3.98 billion and $1.41, respectively.

Analysts expect ORCL’s revenue for the quarter ending May 31, 2024 to increase 5.3% year-over-year to $14.57 billion and EPS for the quarter ending August 31, 2024 to increase 11.3% year-over-year year to $1.32. It has surpassed consensus EPS estimates in three of the next four quarters. Over the past year, the company’s stock has gained 26.8%, closing at $124.68 in the most recent session.

ORCL POWR’s ratings reflect a strong outlook. It has an overall rating of B, which means Buy on our proprietary rating system. POWR Ratings rate stocks based on 118 different factors, each with its own weighting.

It is rated B for stability, sentiment and quality. It ranks 37th out of 137 companies in the Software – Applications industry. In addition to what we stated above, we also gave ORCL ratings for growth, value and momentum. Here you will find all ORCL ratings.

ZoomInfo Technologies Inc. (ZI)

ZI and its subsidiaries provide a platform to go to market and engage sales and marketing teams in the United States and around the world. The company’s cloud-based platform helps users identify target customers, obtain lead forecasts and company ratings, and use automated sales tools to track progress in the transaction cycle.

On May 22, 2024, ZI announced the release of ZoomInfo Copilot, an AI-powered platform that improves sales performance by predicting pipelines and doubling sales opportunities. The platform integrates artificial intelligence with high-quality B2B data to provide actionable insights and automated tools to sales and marketing teams. By leveraging AI technology and accurate B2B data, sales teams can make informed decisions and improve their processes for better results.

In terms of trailing 12-month EBITDA margin, ZI’s 23.08% is 23.3% higher than the industry average of 18.72%. Similarly, the trailing 12-month net profit margin of 6.24% is 112.5% ​​higher than the industry average of 2.94%. Moreover, the 12-month return on total capital of 4.41% is 24.6% higher than the industry average of 3.54%.

ZI’s revenue for the fiscal first quarter ended March 31, 2024 increased 3.1% year-over-year to $310.10 million. Similarly, the company’s adjusted net income and adjusted net earnings per share were $100.50 million and $0.26, representing an increase of 1% and 8.3%, respectively, compared to the prior-year quarter. Additionally, ZI’s unused free cash flow increased 1.3% year-over-year to $122.70 million.

For the quarter ending September 30, 2024, ZI revenues are expected to increase 1.1% year-over-year to $317.23 million. EPS for the quarter ending December 31, 2024 is expected to increase slightly year-over-year to $1.01. It topped Street EPS estimates in each of the four consecutive quarters. Over the past six months, the company’s shares have fallen 8.6%, closing at $12.95 in the most recent session.

ZI is rated B for value and quality. It ranks 42nd in the Software – Applications industry. To see ZI’s growth, momentum, stability and sentiment ratings, click here.

amdocs limited (DOX)

DOX provides software and services worldwide. It designs, develops, operates, implements, supports and sells an open and modular portfolio of cloud solutions.

On May 8, 2024, DOX announced that its subsidiary Vubiquity has been selected by Paramount Global to manage all operational activities and management of MTV Japan’s affiliates under a new licensing agreement. The transition, which is expected to be completed by the end of June 2024, includes content acquisition, programming, localization and broadcasting. This partnership will enable Vubiquity to further expand its presence in the Asian market and strengthen its reputation as a leading provider of content management solutions.

On the same day, DOX announced that Virgin Media O2 is partnering with DOX to expand its range of streaming, gaming, health, lifestyle and safety services. This partnership will enable Virgin Media O2 customers to seamlessly manage all their subscriptions in one place across their TVs, mobile devices and computers. The goal of this collaboration is to improve the overall customer experience by providing a convenient and integrated platform for access to a variety of services.

In terms of return on common equity over the last 12 months, the DOX ratio of 14.81% is 279.2% higher than the industry average of 3.90%. Similarly, the 12-month return on total capital of 10.50% is 299.2% higher than the industry average of 2.63%. Moreover, the trailing 12-month asset turnover ratio of 0.77x is 25.9% higher than the industry average of 0.61x.

In the second quarter ended March 31, 2024, DOX revenues increased 2.5% year-over-year to $1.25 billion. The company’s GAAP operating income and net income increased 5.4% and 2.4% from the prior-year quarter to $229.43 million and $183.62 million, respectively. Moreover, non-GAAP EPS increased 6.1% from the year-ago figure to $1.56.

The Street expects DOX’s EPS and revenue for the quarter ending June 30, 2024 to increase 3.1% and 1.7% year-over-year to $1.62 billion and $1.26 billion, respectively. Over the past six months, the company’s shares have fallen 4.5%, closing at $79.34 in the most recent session.

It’s no surprise that DOX has an overall grade of B, which translates to Buy in our proprietary POWR ratings system.

It ranks 13th out of 44 companies in the Software – business industry. It has a B rating for stability and quality. Click here to see DOX’s ratings on growth, value, momentum and sentiment.

Creative Realities, Inc. (CREX)

CREX and its subsidiaries provide digital marketing technologies and solutions in the United States and around the world. It offers digital signage and media solutions that improve communication in a variety of environments outside the home.

On May 15, 2024, CREX announced its expansion into EMEA with a beta launch for EMEA integrators in 2024 and will offer implementation services to those integrators in North America.

The company aims to attract the attention of digital signage integrators in the EMEA region with enterprise-level CMS platforms tailored to the retail, convenience store and food service segments.

On March 13, 2024, CREX partnered with Departure Media Airport Advertising to enhance the traveler experience at CVG with captivating displays combining LED and static signage, elevating airport advertising standards and creating engaging, revenue-generating spaces.

This collaboration integrates enhanced technology, strategic placement and the ReflectView CMS platform to transform the airport landscape and offer advertisers innovative and effective platforms.

In terms of trailing 12-month leveraged FCF margin, the CREX of 21.65% is 169.6% higher than the industry average of 8.03%. Similarly, trailing 12-month net profit margin of 0.71x is 45.6% higher than the industry average of 0.49x.

Total CREX sales for the first quarter ended March 31, 2024 increased 23.5% year-over-year to $12.29 million, and service and other sales increased 44.8% compared to the same period last year to 8 .14 ​​million USD.

During the same period, gross profit increased by 13.3% compared to the previous year to $5.76 million. Additionally, as of March 31, 2024, CREX’s total liabilities were $39.36 million compared to $41.95 million as of December 31, 2023.

For the quarter ending June 30, 2024, CREX revenue is expected to increase 46.3% year-over-year to $13.45 million. FY2025 EPS is expected to increase 118.5% year-over-year to $0.30. Over the past nine months, the company’s stock has gained 89.3%, closing at $3.54 in the most recent session.

CREX has a B rating on sentiment. It ranks 44th in the Software – Applications industry. To access additional CREX ratings for growth, value, momentum, stability and quality, click here.

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As of Tuesday afternoon, ORCL stock was trading at $124.13 per share, up $1.22 (+0.99%). Year-to-date, ORCL has gained 18.57% compared to the benchmark S&P 500 Index’s gain of 11.50% over the same period.

About the author: Abhishek Bhuyan

Abhishek started his professional career as a financial journalist due to his strong interest in identifying the fundamental factors influencing the future performance of financial instruments. More…

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