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Salesforce (CRM) to Report Q3 Earnings: What's in the Cards?

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Salesforce CRM is slated to release third-quarter fiscal 2021 results on Dec 1.

For the fiscal third quarter, the company projects total revenues between $5.24 billion and $5.25 billion. Moreover, non-GAAP earnings are expected between 73 cents and 74 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $5.25 billion, indicating an increase of 16.3% from the year-ago quarter.

Also, the consensus mark for earnings has remained unrevised at 74 cents per share over the past 30 days. The bottom line is expected to inch up 1.3% year on year.

salesforce.com, inc. Price and Consensus

salesforce.com, inc. Price and Consensus
salesforce.com, inc. Price and Consensus

salesforce.com, inc. price-consensus-chart | salesforce.com, inc. Quote

Notably, Salesforce’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 37.5%.

Let’s see how things have shaped up for this announcement.

Factors at Play

Salesforce’s quarterly performance is likely to have benefited from the robust demand environment as customers are undergoing a major digital transformation. The company’s ability to provide integrated solutions for customers’ business problems is expected to have been a key growth driver.

The company’s performance is also likely to have gained from its firm focus on building and expanding relationships with leading brands across industries and geographies. In addition, significant growth opportunities in the public sector are likely to have been a tailwind during the quarter under review.

Growth across all its four major cloud service offerings, namely Sales Cloud, Service Cloud, Platform and other plus Marketing & Commerce Cloud is likely to have boosted Salesforce’s subscription and supported the revenue stream, which is a major catalyst.

Additionally, the acquisitions of Tableau and Vlocity are anticipated to have significantly aided the company’s top-line growth during the quarter to be reported.

Nonetheless, decline in software spending by small & medium businesses (SMBs) due to the coronavirus outbreak might have affected the company’s fiscal third-quarter performance.

Further, stiff competition from Oracle and Microsoft is a concern in addition to forex headwinds. Increasing investment in international expansions and data centers might have eroded the company’s profitability in the to-be-reported quarter.

What Our Model Says

Our proven model does not predict an earnings beat for Salesforce this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Salesforce currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Signet Jewelers Limited SIG has an Earnings ESP of +13.95% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Toronto-Dominion Bank TD has an Earnings ESP of +3.63% and holds a Zacks Rank of 2, at present.

Construction Partners, Inc. ROAD has an Earnings ESP of +16.02% and carries a Zacks Rank of 2, currently.

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