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Salesforce.com (CRM) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 mins read

In the latest trading session, Salesforce.com (CRM) closed at $260.22, marking a +0.09% move from the previous day. This move lagged the S&P 500's daily gain of 0.8%. Meanwhile, the Dow gained 0.43%, and the Nasdaq, a tech-heavy index, added 0.5%.

Investors will be hoping for strength from CRM as it approaches its next earnings release. The company is expected to report EPS of $0.74, down 1.33% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $5.25 billion, up 16.25% from the year-ago period.

CRM's full-year Zacks Consensus Estimates are calling for earnings of $3.74 per share and revenue of $20.77 billion. These results would represent year-over-year changes of +25.08% and +21.48%, respectively.

Investors might also notice recent changes to analyst estimates for CRM. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Within the past 30 days, our consensus EPS projection remained stagnant. CRM currently has a Zacks Rank of #1 (Strong Buy).

Digging into valuation, CRM currently has a Forward P/E ratio of 69.48. This represents a premium compared to its industry's average Forward P/E of 32.83.

Investors should also note that CRM has a PEG ratio of 3.86 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computer - Software industry currently had an average PEG ratio of 2.72 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 89, which puts it in the top 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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Zacks Investment Research