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salesforce.com, inc. (NYSE:CRM): What Does The Future Look Like?

Simply Wall St

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Looking at salesforce.com, inc.'s (NYSE:CRM) earnings update in January 2019, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by -50% next year relative to the higher past 5-year average growth rate of 76%. Currently with trailing-twelve-month earnings of US$1.1b, we can expect this to reach US$550m by 2020. Below is a brief commentary on the longer term outlook the market has for salesforce.com. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for salesforce.com

How will salesforce.com perform in the near future?

Over the next three years, it seems the consensus view of the 23 analysts covering CRM is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CRM's earnings growth over these next few years.

NYSE:CRM Past and Future Earnings, May 3rd 2019

By 2022, CRM's earnings should reach US$1.9b, from current levels of US$1.1b, resulting in an annual growth rate of 17%. EPS reaches $2.39 in the final year of forecast compared to the current $1.48 EPS today. Margins are currently sitting at 8.4%, approximately the same as previous years. With analysts forecasting revenue growth of 0.72673 and CRM's net income growth expected to roughly track that, this company may add value for shareholders over time.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For salesforce.com, I've compiled three pertinent factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is salesforce.com worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether salesforce.com is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of salesforce.com? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.