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Salesforce.com (CRM) Gains As Market Dips: What You Should Know

Zacks Equity Research

Salesforce.com (CRM) closed at $155.09 in the latest trading session, marking a +0.19% move from the prior day. This change outpaced the S&P 500's 0.08% loss on the day. Meanwhile, the Dow lost 0.07%, and the Nasdaq, a tech-heavy index, lost 0.59%.

Coming into today, shares of the customer-management software developer had gained 4.28% in the past month. In that same time, the Computer and Technology sector gained 4.71%, while the S&P 500 gained 2.7%.

CRM will be looking to display strength as it nears its next earnings release. In that report, analysts expect CRM to post earnings of $0.65 per share. This would mark year-over-year growth of 6.56%. Meanwhile, our latest consensus estimate is calling for revenue of $4.45 billion, up 31.16% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.84 per share and revenue of $16.86 billion, which would represent changes of +3.27% and +26.95%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CRM. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, 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 has moved 0.15% lower. CRM is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, CRM is holding a Forward P/E ratio of 54.46. This valuation marks a premium compared to its industry's average Forward P/E of 29.18.

Meanwhile, CRM's PEG ratio is currently 2.9. 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 2.18 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 88, putting it in the top 35% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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