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Salesforce.com (CRM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Salesforce.com (CRM) closed the most recent trading day at $147, moving +1.93% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.8%. At the same time, the Dow added 0.47%, and the tech-heavy Nasdaq gained 1.12%.

Prior to today's trading, shares of the customer-management software developer had lost 5.4% over the past month. This has lagged the Computer and Technology sector's loss of 0.72% and the S&P 500's loss of 1.07% in that time.

Investors will be hoping for strength from CRM as it approaches 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, the Zacks Consensus Estimate for revenue is projecting net sales of $4.45 billion, up 31.16% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.84 per share and revenue of $16.86 billion. These totals would mark changes of +3.27% and +26.95%, respectively, from last year.

Investors might also notice 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. The Zacks Consensus EPS estimate has moved 0.08% lower within the past month. CRM is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note CRM's current valuation metrics, including its Forward P/E ratio of 50.73. For comparison, its industry has an average Forward P/E of 26.59, which means CRM is trading at a premium to the group.

Meanwhile, CRM's PEG ratio is currently 2.42. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.09 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 45, putting it in the top 18% 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.

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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