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Here's Why Investors Should Add Salesforce (CRM) to Portfolio
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Salesforce's (CRM - Free Report) shares jumped 22% after its third-quarter fiscal 2024 earnings release, driven by strong performance. The surge showcases investors' trust in CRM's solid fundamentals and its strong position in the customer relationship management solutions market.
With healthy fundamentals, Salesforce still appears to be a solid investment option at the moment.
Why Should You Invest in CRM Stock?
Salesforce's earnings have outpaced estimates in each of the last trailing four quarters, delivering an average surprise of 10.86%. This indicates an impressive track record of exceeding earnings estimates.
The Zacks Consensus Estimate of $8.20 per share for fiscal 2024 earnings suggests growth of approximately 56.5% from the year-ago period. For fiscal 2025, the consensus mark for earnings is pegged at $9.51 per share, indicating a year-over-year increase of 16%. Moreover, the company has a long-term earnings growth expectation of 21.50%.
The Zacks Consensus Estimate for fourth-quarter fiscal 2024 earnings has been revised 9 cents upward over the past 60 days to $2.26 per share. The consensus mark for fiscal 2024 earnings has been revised 14 cents upward to $8.20 per share in the past 60 days.
Salesforce currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-earnings multiple of 29.64X compared with its five-year average of 114.31X.
The stock carries a Zacks Rank #2 (Buy) and has a Growth Score of B at present. The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. 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.
Long-Term Growth Drivers
Salesforce's products, such as Data Cloud, Sales Cloud and Service Cloud, are becoming more popular as global corporations increasingly rely on cloud-based solutions. Additionally, customer relationship management solutions like Tableau and Mulesoft are gaining traction as these applications align with the company's focus on building products that meet customer needs. These products have been contributing heavily to the company’s top line.
The company’s unique positioning of Einstein GPT Copilot solutions, combined with artificial intelligence (AI), customer relationship management, data and security, has given it an important space in the evolving AI market. The company forayed into the generative AI space with the launch of Einstein GPT in March 2023.
In September 2023, Salesforce introduced the latest generation of the Einstein AI assistant, which included conversational AI assistants, namely Einstein Copilot and Copilot Studio. These two assistants operate across all Salesforce applications and customer experiences.
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 customer relationship management 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 customer relationship management and social enterprise applications, salesforce is well-positioned to lead the market.
Salesforce's deepening partnerships with industry giants, including Alphabet (GOOGL - Free Report) , Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) , are giving it a strong foothold in the global business landscape. In September 2023, CRM announced its partnership with Alphabet’s Google, which is focused on creating connections between Salesforce and Google Workspace.
In August 2023, CRM and Apple announced the deepening of their 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 customer relationship management 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 third-quarter 2023 revenues grew 11% year over year to $8.7 billion.
Currently, Amazon sports a Zacks Rank #1, Apple carries a Zacks Rank #2 and Alphabet has a Zacks Rank #3 (Hold). Shares of AMZN, AAPL and GOOGL have rallied 59.3%, 35.8% and 46.7%, respectively, over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Here's Why Investors Should Add Salesforce (CRM) to Portfolio
Salesforce's (CRM - Free Report) shares jumped 22% after its third-quarter fiscal 2024 earnings release, driven by strong performance. The surge showcases investors' trust in CRM's solid fundamentals and its strong position in the customer relationship management solutions market.
With healthy fundamentals, Salesforce still appears to be a solid investment option at the moment.
Why Should You Invest in CRM Stock?
Salesforce's earnings have outpaced estimates in each of the last trailing four quarters, delivering an average surprise of 10.86%. This indicates an impressive track record of exceeding earnings estimates.
The Zacks Consensus Estimate of $8.20 per share for fiscal 2024 earnings suggests growth of approximately 56.5% from the year-ago period. For fiscal 2025, the consensus mark for earnings is pegged at $9.51 per share, indicating a year-over-year increase of 16%. Moreover, the company has a long-term earnings growth expectation of 21.50%.
Salesforce Inc. Price and Consensus
Salesforce Inc. price-consensus-chart | Salesforce Inc. Quote
The Zacks Consensus Estimate for fourth-quarter fiscal 2024 earnings has been revised 9 cents upward over the past 60 days to $2.26 per share. The consensus mark for fiscal 2024 earnings has been revised 14 cents upward to $8.20 per share in the past 60 days.
Salesforce currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-earnings multiple of 29.64X compared with its five-year average of 114.31X.
The stock carries a Zacks Rank #2 (Buy) and has a Growth Score of B at present. The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. 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.
Long-Term Growth Drivers
Salesforce's products, such as Data Cloud, Sales Cloud and Service Cloud, are becoming more popular as global corporations increasingly rely on cloud-based solutions. Additionally, customer relationship management solutions like Tableau and Mulesoft are gaining traction as these applications align with the company's focus on building products that meet customer needs. These products have been contributing heavily to the company’s top line.
The company’s unique positioning of Einstein GPT Copilot solutions, combined with artificial intelligence (AI), customer relationship management, data and security, has given it an important space in the evolving AI market. The company forayed into the generative AI space with the launch of Einstein GPT in March 2023.
In September 2023, Salesforce introduced the latest generation of the Einstein AI assistant, which included conversational AI assistants, namely Einstein Copilot and Copilot Studio. These two assistants operate across all Salesforce applications and customer experiences.
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 customer relationship management 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 customer relationship management and social enterprise applications, salesforce is well-positioned to lead the market.
Salesforce's deepening partnerships with industry giants, including Alphabet (GOOGL - Free Report) , Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) , are giving it a strong foothold in the global business landscape. In September 2023, CRM announced its partnership with Alphabet’s Google, which is focused on creating connections between Salesforce and Google Workspace.
In August 2023, CRM and Apple announced the deepening of their 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 customer relationship management 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 third-quarter 2023 revenues grew 11% year over year to $8.7 billion.
Currently, Amazon sports a Zacks Rank #1, Apple carries a Zacks Rank #2 and Alphabet has a Zacks Rank #3 (Hold). Shares of AMZN, AAPL and GOOGL have rallied 59.3%, 35.8% and 46.7%, respectively, over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.