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Salesforce (CRM) Stock Looks Like a Buy Heading into Earnings Monday

Benjamin Rains

Salesforce CRM stock hit a new high in morning trading Friday. Now, with the software-as-a-service firm set to report its Q4 financial results after the closing bell Monday, let’s see why Salesforce stock looks like a strong buy heading into earnings.


Salesforce offers its business clients a wide range of cloud-based platforms to help them run sales, marketing, e-commerce, analytics, and much more. The San Francisco-based firm looks poised to grow for years to come because its customer relationship management offerings have become essential to many companies and would otherwise require a large amount of in-house talent, infrastructure, and maintenance. Salesforce’s clients include American Express AXP, Intuit INTU, the U.S. Department of Agriculture, and more than 150,000 other firms and agencies. 

Marc Benioff’s company also sells Microsoft MSFT Office-style products to help compete against MSFT and Google GOOGL and has introduced new wrinkles to its Einstein artificial intelligence platform, such the ability to conversationally update tasks. And Salesforce completed a $6.5 billion acquisition of MuleSoft—which helps link disparate applications—last year.

Overall, Salesforce and some of its peers such as Adobe ADBE, Oracle ORCL, and VMware VMW, offer software and web-based services that allow companies to operate in today’s connected age, which is hardly cyclical or trendy. “Companies across every industry, in every geography have a mandate to digitally transform their businesses and are turning to Salesforce as a strategic partner,” co-CEO Keith Block said in prepared statements last quarter.

Q4 Outlook

Salesforce’s Q4 fiscal 2019 revenues are projected to climb 24.9% to reach $3.56 billion, based on our current Zacks Consensus Estimate. This would fall just short of Q3’s 26% top-line surge, but beat the year-ago period’s 24% expansion. Meanwhile, CRM’s full-year revenues are projected to climb over 26% to hit $13.24 billion, which would top fiscal 2018’s 25% climb.

More specifically, our NFM estimate calls for the firm’s quarterly subscription and support revenue to climb over 25% from $2.66 billion in the year-ago quarter to touch $3.33 billion. CRM’s much smaller, professional services and other unit is expected to jump roughly 19.3% and hit $233.9 million.



At the bottom end of the income statement, Salesforce’s adjusted fourth-quarter EPS figure is projected to soar 60% to come in at $0.56 per share. In Q3, the company’s adjusted earnings of $0.61 a share beat our $0.50 EPS estimate that would have marked a 28% jump.

Salesforce’s adjusted full-year earnings are expected to skyrocket by over 93%. Plus, CRM’s fiscal 2019 earnings estimate has come up by $0.07 over the last 90 days. The company’s fiscal 2020 EPS picture has also turned more positive during this stretch.

Bottom Line

Clearly, Salesforce’s top-line outlook appears to be steady as the company continues to post roughly 25% year over year revenue growth. This comes as Apple AAPL looks to be headed for a downturn and Amazon’s AMZN sales are projected to slow.

Salesforce is a currently a Zacks Rank #1 (Strong Buy) heading into earnings and has an impressive history of quarterly earnings beats. CRM stock touched a new 52-week high of $165.90 a share Friday morning, which means at least some investors seem excited heading into earnings.

Salesforce is scheduled to release its Q4 and fiscal 2019 financial results after the closing bell on Monday, March 4. Make sure to head back to Zacks for a complete breakdown of the company’s actual fourth quarter metrics.

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