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

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Zacks Equity Research
·3 min read
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Salesforce.com (CRM) closed at $222.17 in the latest trading session, marking a -0.57% move from the prior day. This move lagged the S&P 500's daily gain of 0.03%. Elsewhere, the Dow lost 0.04%, while the tech-heavy Nasdaq added 0.55%.

Prior to today's trading, shares of the customer-management software developer had lost 1.75% over the past month. This has lagged the Computer and Technology sector's gain of 5.24% and the S&P 500's gain of 3.99% in that time.

Wall Street will be looking for positivity from CRM as it approaches its next earnings report date. On that day, CRM is projected to report earnings of $0.75 per share, which would represent year-over-year growth of 13.64%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.68 billion, up 17.02% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.63 per share and revenue of $21.11 billion, which would represent changes of +54.85% and +23.47%, respectively, from the prior year.

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. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Within the past 30 days, our consensus EPS projection remained stagnant. CRM is currently a Zacks Rank #3 (Hold).

In terms of valuation, CRM is currently trading at a Forward P/E ratio of 48.23. For comparison, its industry has an average Forward P/E of 36.18, which means CRM is trading at a premium to the group.

Meanwhile, CRM's PEG ratio is currently 3.45. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.81 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 180, putting it in the bottom 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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