Devoted to understanding the basics and fundamentals of investing

In our second valuation study we will visit EMC Corporation (NYSE: EMC) vs. Oracle Corporation (NYSE: ORCL). In these valuation studies we value two popular using some common valuation techniques, and then provide some commentary on each company's valuation in relation to one another, their industry, and the overall market. To see how the valuation study works you may also view the previous study of Cisco vs Microsoft.

EMC and ORCL both have performed relatively well of late, but both are still well  off of their highs established in 2000 before the tech wreck. We will now visit some of the key valuation measures and see how both of the companies stack up.

                                                            EMC                 ORCL

Current year p/e                              28.48                  16.43

Forward p/e                                    23.96                 14.34

PEG Ratio                                        1.86                  1.15

Price/sales                                       3.34                  5.48

Price/book                                       3.80                   5.82

Cash per share                                $2.19                 $1.37

This is an interesting case because neither company is valued particularly cheap on the whole, but both look cheap on particular measures. ORCL is the far cheaper stock based on the p/e ratios, but on price/book and price/sales EMC is much cheaper. In this case I would give ORCL the edge because of its PEG ratio being far cheaper.

ORCL looks about fairly valued when looking at its closest competitors. The stock appears cheap on a PEG basis, but the company carries a lot of debt and is not cheap on too many other measures. EMC looks more expensive on a valuation basis than most of its data storage devices competitors, but the company also grows quicker than many of those competitors.

In this case I believe neither ORCL or EMC provide a particularly great value at these prices. I believe the companies both need to improve their operations before they are worthy of the price they currently demand.