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

Zacks Equity Research

Salesforce.com (CRM) closed at $176 in the latest trading session, marking a +1.47% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.28%. At the same time, the Dow lost 0.42%, and the tech-heavy Nasdaq lost 0.03%.

Coming into today, shares of the customer-management software developer had gained 10.14% in the past month. In that same time, the Computer and Technology sector gained 5.05%, while the S&P 500 gained 3.31%.

Investors will be hoping for strength from CRM as it approaches its next earnings release. On that day, CRM is projected to report earnings of $0.55 per share, which would represent a year-over-year decline of 21.43%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.75 billion, up 31.83% from the year-ago period.

CRM's full-year Zacks Consensus Estimates are calling for earnings of $2.89 per share and revenue of $17 billion. These results would represent year-over-year changes of +5.09% and +27.99%, respectively.

It is also important to note the recent changes to analyst estimates for CRM. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. CRM is holding a Zacks Rank of #2 (Buy) right now.

Valuation is also important, so investors should note that CRM has a Forward P/E ratio of 60.04 right now. Its industry sports an average Forward P/E of 33.37, so we one might conclude that CRM is trading at a premium comparatively.

Investors should also note that CRM has a PEG ratio of 3.2 right now. 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. CRM's industry had an average PEG ratio of 2.17 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 80, which puts it in the top 32% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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