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

Zacks Equity Research

In the latest trading session, Salesforce.com (CRM) closed at $181.77, marking a -0.59% move from the previous day. This move lagged the S&P 500's daily loss of 0.09%. Elsewhere, the Dow gained 0.04%, while the tech-heavy Nasdaq added 0.06%.

Prior to today's trading, shares of the customer-management software developer had gained 12.43% over the past month. This has outpaced the Computer and Technology sector's gain of 4.55% and the S&P 500's gain of 1.26% in that time.

Investors will be hoping for strength from CRM as it approaches its next earnings release. In that report, analysts expect CRM to post earnings of $0.55 per share. This would mark a year-over-year decline of 21.43%. Meanwhile, our latest consensus estimate is calling for revenue of $4.75 billion, up 31.84% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.89 per share and revenue of $17 billion, which would represent changes of +5.09% and +27.99%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CRM. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.08% higher. CRM is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that CRM has a Forward P/E ratio of 63.22 right now. For comparison, its industry has an average Forward P/E of 33.2, which means CRM is trading at a premium to the group.

It is also worth noting that CRM currently has a PEG ratio of 3.37. 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. The Computer - Software was holding an average PEG ratio of 2.27 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 53, putting it in the top 21% 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.

To follow CRM in the coming trading sessions, be sure to utilize Zacks.com.


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