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

Zacks Equity Research

Salesforce.com (CRM) closed at $158.24 in the latest trading session, marking a +0.71% move from the prior day. This change outpaced the S&P 500's 0.65% loss on the day. Meanwhile, the Dow lost 0.42%, and the Nasdaq, a tech-heavy index, lost 0.46%.

Prior to today's trading, shares of the customer-management software developer had gained 4.34% over the past month. This has lagged the Computer and Technology sector's gain of 5.63% and outpaced the S&P 500's gain of 4.11% in that time.

CRM will be looking to display strength as it nears its next earnings release. 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.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.65 per share and revenue of $16.56 billion, which would represent changes of -3.64% and +24.66%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for CRM. Recent revisions tend to reflect the latest near-term business trends. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 3.09% higher. CRM currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, CRM is holding a Forward P/E ratio of 59.39. Its industry sports an average Forward P/E of 29.97, so we one might conclude that CRM is trading at a premium comparatively.

Meanwhile, CRM's PEG ratio is currently 2.74. 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 2.16 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 78, putting it in the top 31% 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.

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


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