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Salesforce.com (CRM) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Salesforce.com (CRM) closed at $161.04, marking a -1.5% move from the previous day. This change lagged the S&P 500's 0.3% loss on the day. Elsewhere, the Dow lost 0.46%, while the tech-heavy Nasdaq lost 0.34%.

Coming into today, shares of the customer-management software developer had lost 3% in the past month. In that same time, the Computer and Technology sector gained 2.76%, while the S&P 500 gained 1.51%.

Investors will be hoping for strength from Salesforce.com as it approaches its next earnings release. The company is expected to report EPS of $1.02, down 31.08% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $7.7 billion, up 21.47% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.76 per share and revenue of $31.76 billion, which would represent changes of -0.42% and +19.88%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Salesforce.com. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Salesforce.com is currently a Zacks Rank #2 (Buy).

Digging into valuation, Salesforce.com currently has a Forward P/E ratio of 34.37. Its industry sports an average Forward P/E of 24.05, so we one might conclude that Salesforce.com is trading at a premium comparatively.

Meanwhile, CRM's PEG ratio is currently 2.05. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Computer - Software stocks are, on average, holding a PEG ratio of 2.08 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 132, which puts it in the bottom 48% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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