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

Zacks Equity Research

Salesforce.com (CRM) closed at $161.76 in the latest trading session, marking a +0.83% move from the prior day. This change outpaced the S&P 500's 0.92% loss on the day. Meanwhile, the Dow lost 1.17%, and the Nasdaq, a tech-heavy index, lost 0.28%.

Prior to today's trading, shares of the customer-management software developer had gained 19.67% over the past month. This has outpaced the Computer and Technology sector's gain of 16.87% and the S&P 500's gain of 15.69% 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 $0.56, down 39.78% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.85 billion, up 29.87% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.10 per share and revenue of $20.81 billion, which would represent changes of +3.68% and +21.7%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for CRM. These revisions help to show the ever-changing nature of 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 3.49% lower. CRM is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note CRM's current valuation metrics, including its Forward P/E ratio of 51.73. This valuation marks a premium compared to its industry's average Forward P/E of 29.77.

We can also see that CRM currently has a PEG ratio of 2.87. 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 was holding an average PEG ratio of 2.79 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 59, which puts it in the top 24% 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.

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


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