What Should Investors Know About The Future Of Salesforcecom inc’s (NYSE:CRM) Business?
The latest earnings announcement Salesforcecom inc’s (NYSE:CRM) released in October 2017 confirmed that the business finally turned profitable after delivering negative earnings on average over the past couple of years. Investors may find it useful to understand how market analysts perceive Salesforce.com’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for Salesforce.com
Market analysts’ prospects for this coming year seems positive, with earnings growth more than doubling. Earnings continue to grow strongly in the next couple of years, finally reaching $747.9M in 2020.
Even though it’s useful to understand the growth rate year by year relative to today’s level, it may be more insightful gauging the rate at which the business is rising or falling every year, on average. The advantage of this approach is that we can get a better picture of the direction of Salesforce.com’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 50.83%. This means, we can assume Salesforce.com will grow its earnings by 50.83% every year for the next few years.
Next Steps:
For Salesforce.com, I’ve compiled three fundamental aspects you should further research:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is CRM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CRM is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CRM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
