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Here's Why Investors Should Add Salesforce (CRM) to Portfolio
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Salesforce (CRM - Free Report) is a stock that investors should consider adding to their portfolio to benefit from its promising prospects.
Technology stocks have made an impressive rebound in 2023 after a massive sell-off in 2022, triggered by recessionary concerns and inflationary pressure, increased oil prices and interest rates. With a year-to-date (YTD) rise of 28.8%, the tech-laden Nasdaq Composite has outperformed The Dow Jones Industrial Average and the S&P 500 index’s increase of 1.4% and 12.9%, respectively.
Technology stocks have more than 50% of weightage in the Nasdaq Composite index. Technology Select Sector SPDR, the most important component of the broad market index, has returned 36% YTD.
Salesforce is one of the stocks that has outperformed the Zacks Computer - Software industry’s rise of 36.5% year to date. CRM rallied 56.3% in the same time frame.
Why Should You Bet on CRM Stock?
Salesforce stock currently trades way lower than the 52-week high, which reflects its potential to go upward. The stock’s closing price of $207.22, on Oct 9, 2023, was 13% lower than the 52-week high of $238.22 attained on Jul 19, 2023.
Moreover, Salesforce currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-earnings multiple of 23.12X compared with its five-year average of 115.13X. It also trades at a discount to the Zacks Internet Software industry’s one-year forward price-to-earnings multiple of 29.46X.
Additionally, amid the ongoing macroeconomic headwinds and geopolitical issues, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn.
Apart from having solid fundamentals, Salesforce has the favorable combination of a Growth Score of B and a Zacks Rank #2 (Buy) at present.
Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a Growth Score of A or B offer solid investment opportunities.
CRM has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 14.2%. Additionally, the stock has an impressive earnings per share growth expectation for fiscal 2024 and fiscal 2025.
The Zacks Consensus Estimate of $8.06 per share for fiscal 2024 earnings suggests growth of approximately 53.8% from the year-ago period. For fiscal 2025, the consensus mark for earnings is pegged at $9.37 per share, indicating a year-over-year increase of 16.3%.
Long-Term Growth Drivers
The rapid adoption of cloud-based solutions is spurring demand for Salesforce’s products. The company’s focus on introducing more aligned products per customer needs is driving its top line.
Management believes that digitization is reinforcing the company’s strategic relationships. Its ability to provide an integrated solution for customers’ business problems is the key driver.
Per a Fortune Business Insights report, the global CRM software market, valued at $64.41 billion in 2022, is projected to witness a CAGR of 12% between 2023 and 2030. With its SaaS-based CRM and social enterprise applications, we think that salesforce is well-positioned to lead the market.
Salesforce is currently focusing on incorporating generative artificial intelligence (AI) tools across its products as it looks to keep its business ahead of rivals. The company forayed into the generative AI space with the launch of Einstein GPT in March 2023.
Upping its ante in the space, CRM launched its AI Cloud service in June 2023, which is the company’s one-stop AI-powered solution for enterprises looking to enhance productivity. The company also raised its venture capital fund for generative AI to $500 million from $250 million.
On Sep 12, Salesforce introduced the latest generation of the Einstein AI assistant, which now includes conversational AI assistants, namely Einstein Copilot and Copilot Studio. These two assistants operate across all CRM applications and customer experiences.
Salesforce's deepening partnerships with industry giants, including Alphabet, Apple and Amazon, give it a strong foothold in the global business landscape. On Sep 12, Salesforce announced its partnership with Google, which is focused on creating connections between Salesforce and Google Workspace. On Aug 20, Salesforce and Apple announced the deepening of its partnership, aiming to increase the number of mobile apps for businesses available on iPad and iPhone. Also, the partnership between Salesforce and Amazon Web Services has deepened on the Generative AI front.
In addition to partnerships, acquisitions have been one of the key growth strategies for strengthening the company’s overall business. With the acquisition of Airkit.ai, an AI-powered customer service app development startup, Salesforce has further advanced its presence in the AI and CRM-software arena.
Salesforce’s latest reported financial results for the second quarter of fiscal 2023 reflect continued growth despite disruptions caused by macroeconomic headwinds and geopolitical issues. The company’s second-quarter 2023 revenues grew 11% year over year to $8.6 billion.
The Zacks Consensus Estimate for Synopsys’ fourth-quarter fiscal 2023 earnings has been revised upward by 12 cents to $3.04 per share in the past 60 days. For fiscal 2023, earnings estimates have moved upward by 27 cents to $12.50 per share in the past 60 days.
Synopsys’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 4.23%. Shares of SNPS have gained 50.3% year to date.
The Zacks Consensus Estimate for NVIDIA’s third-quarter fiscal 2024 earnings has been revised by 2 cents northward to $3.34 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 7 cents to $10.74 in the past seven days.
NVDA's earnings beat the Zacks Consensus Estimate in the preceding three quarters, while missing the same on one occasion, the average surprise being 9.8%. Shares of NVDA have rallied 209.8% year to date.
The Zacks Consensus Estimate for SPLK's third-quarter fiscal 2024 earnings has been revised upward by a penny to $1.12 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 2 cents to $3.78 per share in the past 30 days.
Splunk’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 155%. Shares of SPLK have surged 71% year to date.
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Here's Why Investors Should Add Salesforce (CRM) to Portfolio
Salesforce (CRM - Free Report) is a stock that investors should consider adding to their portfolio to benefit from its promising prospects.
Technology stocks have made an impressive rebound in 2023 after a massive sell-off in 2022, triggered by recessionary concerns and inflationary pressure, increased oil prices and interest rates. With a year-to-date (YTD) rise of 28.8%, the tech-laden Nasdaq Composite has outperformed The Dow Jones Industrial Average and the S&P 500 index’s increase of 1.4% and 12.9%, respectively.
Technology stocks have more than 50% of weightage in the Nasdaq Composite index. Technology Select Sector SPDR, the most important component of the broad market index, has returned 36% YTD.
Salesforce Inc. Price and Consensus
Salesforce Inc. price-consensus-chart | Salesforce Inc. Quote
Salesforce is one of the stocks that has outperformed the Zacks Computer - Software industry’s rise of 36.5% year to date. CRM rallied 56.3% in the same time frame.
Why Should You Bet on CRM Stock?
Salesforce stock currently trades way lower than the 52-week high, which reflects its potential to go upward. The stock’s closing price of $207.22, on Oct 9, 2023, was 13% lower than the 52-week high of $238.22 attained on Jul 19, 2023.
Moreover, Salesforce currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-earnings multiple of 23.12X compared with its five-year average of 115.13X. It also trades at a discount to the Zacks Internet Software industry’s one-year forward price-to-earnings multiple of 29.46X.
Additionally, amid the ongoing macroeconomic headwinds and geopolitical issues, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn.
Apart from having solid fundamentals, Salesforce has the favorable combination of a Growth Score of B and a Zacks Rank #2 (Buy) at present.
Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a Growth Score of A or B offer solid investment opportunities.
CRM has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 14.2%. Additionally, the stock has an impressive earnings per share growth expectation for fiscal 2024 and fiscal 2025.
The Zacks Consensus Estimate of $8.06 per share for fiscal 2024 earnings suggests growth of approximately 53.8% from the year-ago period. For fiscal 2025, the consensus mark for earnings is pegged at $9.37 per share, indicating a year-over-year increase of 16.3%.
Long-Term Growth Drivers
The rapid adoption of cloud-based solutions is spurring demand for Salesforce’s products. The company’s focus on introducing more aligned products per customer needs is driving its top line.
Management believes that digitization is reinforcing the company’s strategic relationships. Its ability to provide an integrated solution for customers’ business problems is the key driver.
Per a Fortune Business Insights report, the global CRM software market, valued at $64.41 billion in 2022, is projected to witness a CAGR of 12% between 2023 and 2030. With its SaaS-based CRM and social enterprise applications, we think that salesforce is well-positioned to lead the market.
Salesforce is currently focusing on incorporating generative artificial intelligence (AI) tools across its products as it looks to keep its business ahead of rivals. The company forayed into the generative AI space with the launch of Einstein GPT in March 2023.
Upping its ante in the space, CRM launched its AI Cloud service in June 2023, which is the company’s one-stop AI-powered solution for enterprises looking to enhance productivity. The company also raised its venture capital fund for generative AI to $500 million from $250 million.
On Sep 12, Salesforce introduced the latest generation of the Einstein AI assistant, which now includes conversational AI assistants, namely Einstein Copilot and Copilot Studio. These two assistants operate across all CRM applications and customer experiences.
Salesforce's deepening partnerships with industry giants, including Alphabet, Apple and Amazon, give it a strong foothold in the global business landscape. On Sep 12, Salesforce announced its partnership with Google, which is focused on creating connections between Salesforce and Google Workspace. On Aug 20, Salesforce and Apple announced the deepening of its partnership, aiming to increase the number of mobile apps for businesses available on iPad and iPhone. Also, the partnership between Salesforce and Amazon Web Services has deepened on the Generative AI front.
In addition to partnerships, acquisitions have been one of the key growth strategies for strengthening the company’s overall business. With the acquisition of Airkit.ai, an AI-powered customer service app development startup, Salesforce has further advanced its presence in the AI and CRM-software arena.
Salesforce’s latest reported financial results for the second quarter of fiscal 2023 reflect continued growth despite disruptions caused by macroeconomic headwinds and geopolitical issues. The company’s second-quarter 2023 revenues grew 11% year over year to $8.6 billion.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology sector are Synopsys (SNPS - Free Report) , NVIDIA (NVDA - Free Report) and Splunk , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Synopsys’ fourth-quarter fiscal 2023 earnings has been revised upward by 12 cents to $3.04 per share in the past 60 days. For fiscal 2023, earnings estimates have moved upward by 27 cents to $12.50 per share in the past 60 days.
Synopsys’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 4.23%. Shares of SNPS have gained 50.3% year to date.
The Zacks Consensus Estimate for NVIDIA’s third-quarter fiscal 2024 earnings has been revised by 2 cents northward to $3.34 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 7 cents to $10.74 in the past seven days.
NVDA's earnings beat the Zacks Consensus Estimate in the preceding three quarters, while missing the same on one occasion, the average surprise being 9.8%. Shares of NVDA have rallied 209.8% year to date.
The Zacks Consensus Estimate for SPLK's third-quarter fiscal 2024 earnings has been revised upward by a penny to $1.12 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 2 cents to $3.78 per share in the past 30 days.
Splunk’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 155%. Shares of SPLK have surged 71% year to date.