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

Zacks Equity Research

Salesforce.com (CRM) closed at $191.31 in the latest trading session, marking a +0.27% move from the prior day. The stock lagged the S&P 500's daily gain of 0.58%. At the same time, the Dow added 0.62%, and the tech-heavy Nasdaq gained 0.24%.

Prior to today's trading, shares of the customer-management software developer had gained 0.92% over the past month. This has lagged the Computer and Technology sector's gain of 7.08% and the S&P 500's gain of 5.34% in that time.

CRM will be looking to display strength as it nears its next earnings release. On that day, CRM is projected to report earnings of $0.67 per share, which would represent year-over-year growth of 1.52%. Our most recent consensus estimate is calling for quarterly revenue of $4.90 billion, up 22.56% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.97 per share and revenue of $20.05 billion. These totals would mark changes of -0.67% and +17.29%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for CRM. These revisions typically reflect the latest short-term business trends, which can change frequently. 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 has moved 0.22% higher within the past month. CRM currently has a Zacks Rank of #4 (Sell).

In terms of valuation, CRM is currently trading at a Forward P/E ratio of 64.3. Its industry sports an average Forward P/E of 32.71, so we one might conclude that CRM is trading at a premium comparatively.

We can also see that CRM currently has a PEG ratio of 3.57. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 2.84 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 108, which puts it in the top 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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

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salesforce.com, inc. (CRM) : Free Stock Analysis Report
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