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

Zacks Equity Research

Salesforce.com (CRM) closed the most recent trading day at $156.96, moving +0.48% from the previous trading session. This change outpaced the S&P 500's 0.26% loss on the day. Elsewhere, the Dow lost 0.09%, while the tech-heavy Nasdaq lost 0.24%.

Prior to today's trading, shares of the customer-management software developer had gained 1.4% over the past month. This has lagged the Computer and Technology sector's gain of 5.19% and the S&P 500's gain of 2.87% in that time.

Wall Street will be looking for positivity from CRM as it approaches its next earnings report date. The company is expected to report EPS of $0.47, down 33.8% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $3.95 billion, up 20.37% from the prior-year quarter.

CRM's full-year Zacks Consensus Estimates are calling for earnings of $2.65 per share and revenue of $16.56 billion. These results would represent year-over-year changes of -3.64% and +24.66%, respectively.

Any recent changes to analyst estimates for CRM should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.75% higher within the past month. CRM is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, CRM is currently trading at a Forward P/E ratio of 59.04. Its industry sports an average Forward P/E of 31.25, so we one might conclude that CRM is trading at a premium comparatively.

Investors should also note that CRM has a PEG ratio of 2.72 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.16 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 79, putting it in the top 31% 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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