Salesforce Inc (CRM)

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Salesforce.com (CRM) Dips More Than Broader Markets: What You Should Know
By: Zacks Equity Research | October 14, 2020

Salesforce.com (CRM) closed at $261.83 in the latest trading session, marking a -1.87% move from the prior day. This change lagged the S&P 500's 0.66% loss on the day. At the same time, the Dow lost 0.58%, and the tech-heavy Nasdaq lost 0.8%.

Prior to today's trading, shares of the customer-management software developer had gained 6.02% over the past month. This has lagged the Computer and Technology sector's gain of 8.25% and outpaced the S&P 500's gain of 5.22% in that time.

Wall Street will be looking for positivity from CRM as it approaches its next earnings report date. In that report, analysts expect CRM to post earnings of $0.74 per share. This would mark a year-over-year decline of 1.33%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.25 billion, up 16.25% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.74 per share and revenue of $20.77 billion, which would represent changes of +25.08% and +21.48%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for CRM. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. CRM currently has a Zacks Rank of #1 (Strong Buy).

In terms of valuation, CRM is currently trading at a Forward P/E ratio of 71.29. This valuation marks a premium compared to its industry's average Forward P/E of 34.76.

We can also see that CRM currently has a PEG ratio of 4.55. 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 was holding an average PEG ratio of 2.73 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 81, which puts it in the top 33% 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.

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