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Salesforce.com (CRM) Moves 5.4% Higher: Will This Strength Last?

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Salesforce.com (CRM - Free Report) shares soared 5.4% in the last trading session to close at $238.10. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 3.6% loss over the past four weeks.

The upswing came after Salesforce reported better-than-expected first-quarter results and raised outlook for full-fiscal 2022. The company’s non-GAAP earnings of $1.21 per share handily beat the Zacks Consensus Estimate of 88 cents. Quarterly earnings jumped 72.9% year over year mainly on higher revenues and a benefit of 24 cents per share from mark-to-mark accounting required by ASU 2016-01.

Salesforce’s quarterly revenues of $5.96 billion climbed 23% year on year, surpassing the Zacks Consensus Estimate of $5.88 billion. The top-line figure also improved 20% at constant currency.

Buoyed by strong first-quarter performance, the company raised its fiscal 2022 sales outlook to $25.9-$26 billion from the $25.65-$25.75 billion projected earlier. It now estimates earnings in the range of $3.79-$3.81 per share for the fiscal year, up from the previously guided $3.39-$3.41 per share range.

Price and Consensus

Price Consensus Chart for CRM

This customer-management software developer is expected to post quarterly earnings of $0.87 per share in its upcoming report, which represents a year-over-year change of -39.6%. Revenues are expected to be $6.14 billion, up 19.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Salesforce.com, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CRM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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