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

Zacks Equity Research
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Salesforce.com (CRM) closed at $165.36 in the latest trading session, marking a -0.36% move from the prior day. This change lagged the S&P 500's 0.11% gain on the day. Elsewhere, the Dow gained 0.04%, while the tech-heavy Nasdaq added 0.19%.

Coming into today, shares of the customer-management software developer had gained 6.95% in the past month. In that same time, the Computer and Technology sector gained 6.07%, while the S&P 500 gained 4.42%.

CRM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.61, down 17.57% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.68 billion, up 22.52% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.66 per share and revenue of $16.11 billion, which would represent changes of -3.27% and +21.31%, respectively, from the prior year.

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

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 has moved 9.66% lower. CRM currently has a Zacks Rank of #3 (Hold).

Digging into valuation, CRM currently has a Forward P/E ratio of 62.34. This valuation marks a premium compared to its industry's average Forward P/E of 30.55.

Meanwhile, CRM's PEG ratio is currently 2.72. 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 2.31 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 23, putting it in the top 10% 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.

To follow CRM in the coming trading sessions, be sure to utilize Zacks.com.


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