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Salesforce.com (CRM) Laps the Stock Market: Here's Why

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Salesforce.com (CRM - Free Report) closed the most recent trading day at $344.14, moving +1.44% from the previous trading session. The stock's performance was ahead of the S&P 500's daily gain of 0.72%. On the other hand, the Dow registered a gain of 0.3%, and the technology-centric Nasdaq increased by 1.35%.

The customer-management software developer's shares have seen an increase of 2.64% over the last month, surpassing the Computer and Technology sector's loss of 1.35% and the S&P 500's gain of 1.02%.

The upcoming earnings release of Salesforce.com will be of great interest to investors. On that day, Salesforce.com is projected to report earnings of $2.60 per share, which would represent year-over-year growth of 13.54%. Meanwhile, the latest consensus estimate predicts the revenue to be $10.04 billion, indicating an 8.06% increase compared to the same quarter of the previous year.

Any recent changes to analyst estimates for Salesforce.com should also be noted by investors. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, there's been a 0.19% rise in the Zacks Consensus EPS estimate. Salesforce.com is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note Salesforce.com's current valuation metrics, including its Forward P/E ratio of 30.39. This denotes a discount relative to the industry's average Forward P/E of 31.

We can additionally observe that CRM currently boasts a PEG ratio of 2.05. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. By the end of yesterday's trading, the Computer - Software industry had an average PEG ratio of 2.24.

The Computer - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 139, finds itself in the bottom 45% echelons of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow CRM in the coming trading sessions, be sure to utilize Zacks.com.


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