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

Zacks Equity Research
Hibbett (HIBB) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

In the latest trading session, Salesforce.com (CRM) closed at $155.74, marking a -0.15% move from the previous day. This move lagged the S&P 500's daily gain of 0.85%. Meanwhile, the Dow gained 0.77%, and the Nasdaq, a tech-heavy index, added 1.08%.

Prior to today's trading, shares of the customer-management software developer had lost 1.75% over the past month. This has was narrower than the Computer and Technology sector's loss of 4.99% and the S&P 500's loss of 2.06% in that time.

CRM will be looking to display strength as it nears its next earnings release, which is expected to be June 4, 2019. On that day, CRM is projected to report earnings of $0.61 per share, which would represent a year-over-year decline of 17.57%. Meanwhile, our latest consensus estimate is calling for revenue of $3.68 billion, up 22.52% from the prior-year quarter.

CRM's full-year Zacks Consensus Estimates are calling for earnings of $2.66 per share and revenue of $16.11 billion. These results would represent year-over-year changes of -3.27% and +21.31%, respectively.

It is also important to note the recent changes to analyst estimates for CRM. These revisions help to show the ever-changing nature of near-term business trends. 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. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. CRM is currently a Zacks Rank #3 (Hold).

Looking at its valuation, CRM is holding a Forward P/E ratio of 58.59. For comparison, its industry has an average Forward P/E of 30.61, which means CRM is trading at a premium to the group.

Also, we should mention that CRM has a PEG ratio of 2.56. 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 2.22 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 76, putting it in the top 30% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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