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Is Salesforce (CRM) Set to Beat Earnings Estimates?

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Salesforce (CRM - Free Report) has become a Wall Street favorite over the last few years as its cloud-based customer relations business blossomed into a booming industry. Shares of Salesforce have soared 43% during the last year, closing just below an all-time high one day before the company is set to report its fourth-quarter earnings results.

The company’s stock price also climbed nearly 3% in the past four weeks, with investor sentiment relatively high ahead of the release of Salesforce’s Q4 report. Salesforce is expected to see its adjusted Q4 earnings hit $0.33 per share, based on our current Zacks Consensus Estimates. CRM is also projected to post quarterly revenues of $2.81 billion, which would mark a 22.64% year-over-year climb.

Investors will be happy to note that Salesforce is projected to expand its bottom-line by nearly 18% in the fourth quarter. But we need to know a bit more in order to gauge whether the company might actually top this strong EPS estimate.

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to beat. Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Salesforce is currently a Zacks Rank #3 (Hold) and sports an “A” grade for Growth in our Style Scores system. When paired with the company’s Earnings ESP of 0.25%, which means earnings estimates have been higher directly ahead of Salesforce’s Q4 results, investors should consider this stock as one that has potential to beat earnings on Wednesday.

Investors should also note that Salesforce has topped or matched earnings estimates in 14 straight quarters, with beats of 5.41% and 6.45%, respectively, over the last two periods.

Salesforce is set to report its fourth-quarter and full fiscal year earnings after the closing bell on Wednesday, Feb. 28.

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