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Salesforce (CRM - Free Report) stock has been one of the big winners during the first half of 2023, up nearly 60%.
Despite all the talk about large-cap tech being overvalued and overheated heading into July, Salesforce still trades 30% below its all-time highs. And CRM’s new commitment to profits, coupled with its growth outlook, has Salesforce stock trading at some extremely attractive valuation levels.
Salesforce’s expansive portfolio of subscription software offerings are also more essential than ever before across every aspect of the economy.
Price, Technical Levels & Valuation
Salesforce shares have soared nearly 60% YTD to outshine Amazon, Apple, and many other big tech stocks. Even after its impressive ride, CRM currently trades 10% below its average Zacks price target and roughly 32% under its 2021 peaks.
CRM has underperformed the wider Zacks Tech Sector over the last five years, up 55% vs. 85%, as Wall Street appeared to grow frustrated with its commitment to growth over the bottom line—but that is changing (as we will get to).
Image Source: Zacks Investment Research
Salesforce has soared 450% in the last 10 years to blow away the Zacks Tech sector’s 260%, with it also up roughly 1,140% in the last 15 years to triple the tech sector and roughly match Microsoft (MSFT - Free Report) . One of the nearby charts also showcases CRM’s massive run since its 2004 IPO year.
Salesforce has pulled back from the 52-week highs it hit at the end of May. The small drop pushed it below oversold RSI territory and right to neutral levels.
Plus, CRM stock recently found support at its 50-day moving average, while trading far above its 200-day. Technical-focused traders might also be glad to know that Salesforce is once again above both its 200-week and 50-week moving averages.
Image Source: Zacks Investment Research
The downturn coupled with its improved earnings outlook has Salesforce trading at 35.7X forward 12-month earnings. This marks a massive discount to its own five-year highs of 206X and 70% value compared to its five-year median.
CRM’s PEG ratio, which factors in its growth outlook, currently comes in at its lowest levels since the financial crisis at 1.9. Salesforce’s PEG ratio also marks a discount to Zacks Tech sector and solid value vs. Microsoft’s 2.7, Apple’s 2.3, and its Computer-Software industry’s 2.6.
Image Source: Zacks Investment Research
The Business and Its Profitability Pivot
Salesforce is one of the pioneers of modern business software and the wider customer relationship management and software-as-a-service industries. CRM’s current offerings support sales, marketing, commerce, customer and client engagement, analytics, app development, and beyond, servicing a wide spectrum of the economy.
Salesforce, like nearly every tech company, is pushing forward into the booming world of artificial intelligence. The company is currently working to infuse “trusted, secure generative AI across our entire product portfolio. Salesforce's generative AI ecosystem wields Einstein GPT, Slack GPT, and Tableau GPT, delivering trusted power across our product portfolio.”
Salesforce made a few large acquisitions over the last several years to expand its reach. These efforts include its $28 billion deal to buy Slack in the summer of 2021 to help CRM compete against Microsoft and others in the evolving work communication space. The deal came roughly two years after Salesforce paid $15 billion for data analytics platform Tableau.
Image Source: Zacks Investment Research
These recent deals could mark the last in a long time for Salesforce as it focuses on the bottom line following a successful activist investor push. CEO Marc Benioff said on its Q4 FY23 (2022) earnings call on March 1 that the goal “is to make Salesforce the largest and most profitable software company in the world.”
Salesforce’s transformation plan includes short-term and long-term restructuring. Salesforce also said earlier this year that it disbanded its M&A committee. Salesforce is focused on a transformational FY24 that includes a beefed-up share repurchase plan from $10 billion to $20 billion.
Growth and Outlook
Salesforce posted between roughly 25% to 35% sales growth for 10 straight years through its fiscal 2022. CRM then grew its revenue by 18% in fiscal 2023 (last year).
Zacks estimates call for Salesforce’s revenue to climb by roughly 11% in both FY24 and FY25 to see it hit $38.47 billion. These are the kinds of stable low double-digit sales growth figures (mostly organic) that Wall Street will love as long as it is accompanied by solid bottom line expansion.
Image Source: Zacks Investment Research
Salesforce’s adjusted earnings are projected to soar by 42% this year to hit $7.44 per share and then climb by about 21% next year to $8.99 a share. These growth projections follow 10% adjusted earnings growth last year. Plus, Salesforce has beaten our quarterly EPS estimates for five years running.
Bottom Line
Salesforce’s subscription software offerings aren’t going out of style in our digital-driven world. The tech giant’s new-found focus on margins and profitability should also start to attract long-term investors to again, as will its AI efforts.
Salesforce’s upbeat earnings outlook helps it land a Zacks Rank #1 (Strong Buy) as we close out June and look ahead to the potentially bullish second half.
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Bull of the Day: Salesforce (CRM)
Salesforce (CRM - Free Report) stock has been one of the big winners during the first half of 2023, up nearly 60%.
Despite all the talk about large-cap tech being overvalued and overheated heading into July, Salesforce still trades 30% below its all-time highs. And CRM’s new commitment to profits, coupled with its growth outlook, has Salesforce stock trading at some extremely attractive valuation levels.
Salesforce’s expansive portfolio of subscription software offerings are also more essential than ever before across every aspect of the economy.
Price, Technical Levels & Valuation
Salesforce shares have soared nearly 60% YTD to outshine Amazon, Apple, and many other big tech stocks. Even after its impressive ride, CRM currently trades 10% below its average Zacks price target and roughly 32% under its 2021 peaks.
CRM has underperformed the wider Zacks Tech Sector over the last five years, up 55% vs. 85%, as Wall Street appeared to grow frustrated with its commitment to growth over the bottom line—but that is changing (as we will get to).
Image Source: Zacks Investment Research
Salesforce has soared 450% in the last 10 years to blow away the Zacks Tech sector’s 260%, with it also up roughly 1,140% in the last 15 years to triple the tech sector and roughly match Microsoft (MSFT - Free Report) . One of the nearby charts also showcases CRM’s massive run since its 2004 IPO year.
Salesforce has pulled back from the 52-week highs it hit at the end of May. The small drop pushed it below oversold RSI territory and right to neutral levels.
Plus, CRM stock recently found support at its 50-day moving average, while trading far above its 200-day. Technical-focused traders might also be glad to know that Salesforce is once again above both its 200-week and 50-week moving averages.
Image Source: Zacks Investment Research
The downturn coupled with its improved earnings outlook has Salesforce trading at 35.7X forward 12-month earnings. This marks a massive discount to its own five-year highs of 206X and 70% value compared to its five-year median.
CRM’s PEG ratio, which factors in its growth outlook, currently comes in at its lowest levels since the financial crisis at 1.9. Salesforce’s PEG ratio also marks a discount to Zacks Tech sector and solid value vs. Microsoft’s 2.7, Apple’s 2.3, and its Computer-Software industry’s 2.6.
Image Source: Zacks Investment Research
The Business and Its Profitability Pivot
Salesforce is one of the pioneers of modern business software and the wider customer relationship management and software-as-a-service industries. CRM’s current offerings support sales, marketing, commerce, customer and client engagement, analytics, app development, and beyond, servicing a wide spectrum of the economy.
Salesforce, like nearly every tech company, is pushing forward into the booming world of artificial intelligence. The company is currently working to infuse “trusted, secure generative AI across our entire product portfolio. Salesforce's generative AI ecosystem wields Einstein GPT, Slack GPT, and Tableau GPT, delivering trusted power across our product portfolio.”
Salesforce made a few large acquisitions over the last several years to expand its reach. These efforts include its $28 billion deal to buy Slack in the summer of 2021 to help CRM compete against Microsoft and others in the evolving work communication space. The deal came roughly two years after Salesforce paid $15 billion for data analytics platform Tableau.
Image Source: Zacks Investment Research
These recent deals could mark the last in a long time for Salesforce as it focuses on the bottom line following a successful activist investor push. CEO Marc Benioff said on its Q4 FY23 (2022) earnings call on March 1 that the goal “is to make Salesforce the largest and most profitable software company in the world.”
Salesforce’s transformation plan includes short-term and long-term restructuring. Salesforce also said earlier this year that it disbanded its M&A committee. Salesforce is focused on a transformational FY24 that includes a beefed-up share repurchase plan from $10 billion to $20 billion.
Growth and Outlook
Salesforce posted between roughly 25% to 35% sales growth for 10 straight years through its fiscal 2022. CRM then grew its revenue by 18% in fiscal 2023 (last year).
Zacks estimates call for Salesforce’s revenue to climb by roughly 11% in both FY24 and FY25 to see it hit $38.47 billion. These are the kinds of stable low double-digit sales growth figures (mostly organic) that Wall Street will love as long as it is accompanied by solid bottom line expansion.
Image Source: Zacks Investment Research
Salesforce’s adjusted earnings are projected to soar by 42% this year to hit $7.44 per share and then climb by about 21% next year to $8.99 a share. These growth projections follow 10% adjusted earnings growth last year. Plus, Salesforce has beaten our quarterly EPS estimates for five years running.
Bottom Line
Salesforce’s subscription software offerings aren’t going out of style in our digital-driven world. The tech giant’s new-found focus on margins and profitability should also start to attract long-term investors to again, as will its AI efforts.
Salesforce’s upbeat earnings outlook helps it land a Zacks Rank #1 (Strong Buy) as we close out June and look ahead to the potentially bullish second half.