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Time to Buy Salesforce (CRM) & Kroger (KR) Stock After Earnings?
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This week’s earnings reports were highlighted by strong quarterly releases from Salesforce (CRM - Free Report) ) and Kroger (KR - Free Report) ) with both impressively surpassing expectations and offering better-than-expected guidance.
Let’s see if it’s time to buy Salesforce and Kroger stock following their impressive fourth-quarter reports.
Salesforce Q4 Review
Salesforce crushed its Q4 expectations on its top and bottom lines after hours on Wednesday. The customer relationship managment software company beat Q4 earnings expectations by 24% with EPS of $1.68, and beat top-line estimates by 5% with sales at $8.38 billion. Year over year, Q4 earnings were up 100% with sales rising 14% from the prior-year quarter.
Salesforce very much appeased Wall Street and investors alike by also offering better-than-expected profit guidance. CEO and co-founder Marc Benioff also highlighted that salesforce closed its fiscal year 2023 with operating cash flow at $7.1 billion, up 19% YoY and its highest cash flow in company history. This led to Salesforce also announcing a new $20 billion stock buyback plan.
Image Source: Zacks Investment Research
Kroger Q4 Review
Pivoting to Kroger’s Q4 report, the retail grocery chain operator beat bottom-line expectations by 10% on Thursday with earnings of $0.99 per share. Fourth-quarter sales slightly topped estimates at $34.78 billion. Year over year, Q4 EPS was up 9% with sales rising 5% from the prior-year quarter.
During the quarterly release, a few of the highlights were Identical sales without fuel increasing 6% with digital sales growing 12%. Overall, Kroger’s adjusted EPS grew 15% in 2022 with an operating profit of $4.1 billion and total identical sales without fuel up 5.6%.
Image Source: Zacks Investment Research
Performance & Valuation
Salesforce stock ended yesterday’s trading session up 11% with Kroger shares 5% higher. Year to date Salesforce stock has climbed 41% to outperform Kroger’s +2%, the S&P 500’s +4%, and the Nasdaq’s +9%. However, over the last three years, Kroger’s +48% has topped Salesforce’s +6% and the broader indexes.
Image Source: Zacks Investment Research
Both stocks may have more upside based on their historical valuation and Kroger especially stands out with KR stock landing an “A” Style Scores grade for Value.
Kroger trades at just 10.8X forward earnings which is nicely below its industry average of 12.7X. Kroger also trades 45% beneath its decade high of 19.6X and at a 17% discount to the median of 13.1X. Notably, Kroger shares trade below the S&P 500’s 17.9X forward earnings as well.
Image Source: Zacks Investment Research
In comparison, Salesforce’s P/E valuation is above the benchmark at 31.8X forward earnings but is very attractive relative to its past. While Salesforce also trades higher than the industry average of 27.1X it does trade well below its extreme decade-long high and 78% beneath the median of 144.1X.
Furthermore, when taking their growth rate into account we can see that both Salesforce and Kroger’s PEG ratios are not very far above the optimum level of 1.0 at 1.87 and 1.77, respectively.
Image Source: Zacks Investment Research
Growth Outlook
After rounding out its fiscal 2023, Salesforce earnings are expected to jump 11% in FY24 and climb another 20% in FY25 at $7.04 per share. Earnings estimate revisions have already gone up after the company’s strong Q4 report and this could certainly continue.
On the top line, sales are forecasted to be up 10% for FY24 and rise another 11% in FY25 to $38.33 billion. Impressively, fiscal 2025 would be a very stellar 212% increase from pre-pandemic levels with 2019 sales at $12.28 billion.
Image Source: Zacks Investment Research
Turning to Kroger, earnings are forecasted to be virtually flat for FY24 and rise 2% in FY25 at $4.30 per share. Kroger’s earnings estimates are also trending higher following its strong Q4 report and upbeat guidance.
Kroger’s sales are now projected to be up 3% in FY24 and rise another 1% in FY25 to $154.33 billion. More importantly, fiscal 2025 sales would be 27% above pre-pandemic levels with 2019 sales at $121.16 billion.
Image Source: Zacks Investment Research
Bottom Line
Salesforce (CRM - Free Report) and Kroger (KR - Free Report) are two trending stocks right now and they certainly look attractive following their strong Q4 reports. Both stocks currently sport a Zacks Rank #2 (Buy) as earnings estimate revisions continue to trend higher and may keep going up following their positive quarterly results and upbeat guidance.
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Time to Buy Salesforce (CRM) & Kroger (KR) Stock After Earnings?
This week’s earnings reports were highlighted by strong quarterly releases from Salesforce (CRM - Free Report) ) and Kroger (KR - Free Report) ) with both impressively surpassing expectations and offering better-than-expected guidance.
Let’s see if it’s time to buy Salesforce and Kroger stock following their impressive fourth-quarter reports.
Salesforce Q4 Review
Salesforce crushed its Q4 expectations on its top and bottom lines after hours on Wednesday. The customer relationship managment software company beat Q4 earnings expectations by 24% with EPS of $1.68, and beat top-line estimates by 5% with sales at $8.38 billion. Year over year, Q4 earnings were up 100% with sales rising 14% from the prior-year quarter.
Salesforce very much appeased Wall Street and investors alike by also offering better-than-expected profit guidance. CEO and co-founder Marc Benioff also highlighted that salesforce closed its fiscal year 2023 with operating cash flow at $7.1 billion, up 19% YoY and its highest cash flow in company history. This led to Salesforce also announcing a new $20 billion stock buyback plan.
Image Source: Zacks Investment Research
Kroger Q4 Review
Pivoting to Kroger’s Q4 report, the retail grocery chain operator beat bottom-line expectations by 10% on Thursday with earnings of $0.99 per share. Fourth-quarter sales slightly topped estimates at $34.78 billion. Year over year, Q4 EPS was up 9% with sales rising 5% from the prior-year quarter.
During the quarterly release, a few of the highlights were Identical sales without fuel increasing 6% with digital sales growing 12%. Overall, Kroger’s adjusted EPS grew 15% in 2022 with an operating profit of $4.1 billion and total identical sales without fuel up 5.6%.
Image Source: Zacks Investment Research
Performance & Valuation
Salesforce stock ended yesterday’s trading session up 11% with Kroger shares 5% higher. Year to date Salesforce stock has climbed 41% to outperform Kroger’s +2%, the S&P 500’s +4%, and the Nasdaq’s +9%. However, over the last three years, Kroger’s +48% has topped Salesforce’s +6% and the broader indexes.
Image Source: Zacks Investment Research
Both stocks may have more upside based on their historical valuation and Kroger especially stands out with KR stock landing an “A” Style Scores grade for Value.
Kroger trades at just 10.8X forward earnings which is nicely below its industry average of 12.7X. Kroger also trades 45% beneath its decade high of 19.6X and at a 17% discount to the median of 13.1X. Notably, Kroger shares trade below the S&P 500’s 17.9X forward earnings as well.
Image Source: Zacks Investment Research
In comparison, Salesforce’s P/E valuation is above the benchmark at 31.8X forward earnings but is very attractive relative to its past. While Salesforce also trades higher than the industry average of 27.1X it does trade well below its extreme decade-long high and 78% beneath the median of 144.1X.
Furthermore, when taking their growth rate into account we can see that both Salesforce and Kroger’s PEG ratios are not very far above the optimum level of 1.0 at 1.87 and 1.77, respectively.
Image Source: Zacks Investment Research
Growth Outlook
After rounding out its fiscal 2023, Salesforce earnings are expected to jump 11% in FY24 and climb another 20% in FY25 at $7.04 per share. Earnings estimate revisions have already gone up after the company’s strong Q4 report and this could certainly continue.
On the top line, sales are forecasted to be up 10% for FY24 and rise another 11% in FY25 to $38.33 billion. Impressively, fiscal 2025 would be a very stellar 212% increase from pre-pandemic levels with 2019 sales at $12.28 billion.
Image Source: Zacks Investment Research
Turning to Kroger, earnings are forecasted to be virtually flat for FY24 and rise 2% in FY25 at $4.30 per share. Kroger’s earnings estimates are also trending higher following its strong Q4 report and upbeat guidance.
Kroger’s sales are now projected to be up 3% in FY24 and rise another 1% in FY25 to $154.33 billion. More importantly, fiscal 2025 sales would be 27% above pre-pandemic levels with 2019 sales at $121.16 billion.
Image Source: Zacks Investment Research
Bottom Line
Salesforce (CRM - Free Report) and Kroger (KR - Free Report) are two trending stocks right now and they certainly look attractive following their strong Q4 reports. Both stocks currently sport a Zacks Rank #2 (Buy) as earnings estimate revisions continue to trend higher and may keep going up following their positive quarterly results and upbeat guidance.