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salesforce Underperformed in 2019: Can it Rebound in 2020?
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salesforce (CRM - Free Report) , a titan in the customer relationship management (CRM - Free Report) space, is pulling out all the stops to maintain its dominance in the market.
Per IDC’s Worldwide Semiannual Software Tracker, salesforce remained the #1 CRM providers for the sixth straight year, demonstrating the attractiveness of its cloud-based solutions. The company cemented its overall market share position and inflated its revenue base more than any other CRM vendor, the firm added.
However, the stock has underperformed its industry’s and the S&P 500 Index’s rally of 44.1% and 27.2% year to date, respectively.
The underperformance can be attributed to intensifying competition in the CRM space as behemoths like Microsoft (MSFT - Free Report) , Adobe (ADBE - Free Report) , Oracle (ORCL - Free Report) , IBM and SAP SE (SAP - Free Report) vie to grab a generous market share.
Positive Earnings Estimates
Nevertheless, salesforce’s CRM supremacy is expected to aid the top and bottom-line growth.
The Zacks Consensus Estimate for fiscal 2021 earnings (fiscal year ending January) is pegged at $3.10 per share, up 1% in the past 60 days. The earnings figure indicates growth of 7.3% from the year-ago reported figure.
Also, the Zacks Consensus Estimate for fiscal 2021 revenues stands at $20.89 billion, indicating 22.9% improvement from the prior-year reported figure.
Further, salesforce boasts a superb earnings track record, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
salesforce is benefiting from a robust demand environment as customers are undergoing a major digital transformation. The company’s ability to provide an integrated solution for customers’ business problems is the key driver.
The company continues to build and expand relationships with leading brands across industries and geographies. Moreover, significant growth opportunity in the public sector is a tailwind.
On this front, the company has been riding immensely on its burgeoning partner ecosystem, which is contributing to business wins and boosting its presence globally.
Notably, growth across all its four major cloud service offerings, namely Sales Cloud, Service Cloud, Platform and other plus Marketing & Commerce Cloud steadily boost the company’s subscription and support revenue stream, which is a major catalyst.
Most importantly, acquisitions have been one of key growth strategies, strengthening the company’s position in the CRM solution-providing space. Notably, buyouts of Tableau, ClickSoftware, Mulesoft, Datorama and CloudCraze over the last couple of years have been immensely lucrative for the company.
Solid organic growth story coupled with acquisitions which are a strategic fit is helping salesforce deliver sustained top-line expansion. Notably, management intends to double the company’s top line by fiscal year 2024 with a revenue target of $34-$35 billion, thus making it the fastest enterprise software entity to attain that milestone.
However, competitors are gearing up with frequent launches of products and services to target the CRM market. Additionally, shift in focus of traditional enterprise software application and platform vendors to cloud computing is stiffening rivalry in the space.
Conclusion
CRM is one of the fastest growing software markets and this positive trend is expected to continue in the coming years.
Per a ResearchAndMarkets.com report, the global CRM software market, valued at $25.5 billion in 2018, is projected to reach $36.53 billion at a CAGR of 9.4% through 2022.
With its SaaS-based CRM and social enterprise applications, we think that salesforce is well-positioned to lead the market. Further, given the spurt in initiatives, the company looks set to play an instrumental role in the reinforcement of cloud computing, AI and other cutting-edge areas of tech innovation.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?
Image: Bigstock
salesforce Underperformed in 2019: Can it Rebound in 2020?
salesforce (CRM - Free Report) , a titan in the customer relationship management (CRM - Free Report) space, is pulling out all the stops to maintain its dominance in the market.
Per IDC’s Worldwide Semiannual Software Tracker, salesforce remained the #1 CRM providers for the sixth straight year, demonstrating the attractiveness of its cloud-based solutions. The company cemented its overall market share position and inflated its revenue base more than any other CRM vendor, the firm added.
However, the stock has underperformed its industry’s and the S&P 500 Index’s rally of 44.1% and 27.2% year to date, respectively.
The underperformance can be attributed to intensifying competition in the CRM space as behemoths like Microsoft (MSFT - Free Report) , Adobe (ADBE - Free Report) , Oracle (ORCL - Free Report) , IBM and SAP SE (SAP - Free Report) vie to grab a generous market share.
Positive Earnings Estimates
Nevertheless, salesforce’s CRM supremacy is expected to aid the top and bottom-line growth.
The Zacks Consensus Estimate for fiscal 2021 earnings (fiscal year ending January) is pegged at $3.10 per share, up 1% in the past 60 days. The earnings figure indicates growth of 7.3% from the year-ago reported figure.
Also, the Zacks Consensus Estimate for fiscal 2021 revenues stands at $20.89 billion, indicating 22.9% improvement from the prior-year reported figure.
Further, salesforce boasts a superb earnings track record, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
Let’s check out the factors that are likely to boost this Zacks Rank #3 (Hold) stock next year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors to Drive salesforce in 2020
salesforce is benefiting from a robust demand environment as customers are undergoing a major digital transformation. The company’s ability to provide an integrated solution for customers’ business problems is the key driver.
The company continues to build and expand relationships with leading brands across industries and geographies. Moreover, significant growth opportunity in the public sector is a tailwind.
On this front, the company has been riding immensely on its burgeoning partner ecosystem, which is contributing to business wins and boosting its presence globally.
Notably, growth across all its four major cloud service offerings, namely Sales Cloud, Service Cloud, Platform and other plus Marketing & Commerce Cloud steadily boost the company’s subscription and support revenue stream, which is a major catalyst.
Most importantly, acquisitions have been one of key growth strategies, strengthening the company’s position in the CRM solution-providing space. Notably, buyouts of Tableau, ClickSoftware, Mulesoft, Datorama and CloudCraze over the last couple of years have been immensely lucrative for the company.
salesforce.com, inc. Revenue (TTM)
salesforce.com, inc. revenue-ttm | salesforce.com, inc. Quote
Strong Organic Growth to Counter Competition
Solid organic growth story coupled with acquisitions which are a strategic fit is helping salesforce deliver sustained top-line expansion. Notably, management intends to double the company’s top line by fiscal year 2024 with a revenue target of $34-$35 billion, thus making it the fastest enterprise software entity to attain that milestone.
However, competitors are gearing up with frequent launches of products and services to target the CRM market. Additionally, shift in focus of traditional enterprise software application and platform vendors to cloud computing is stiffening rivalry in the space.
Conclusion
CRM is one of the fastest growing software markets and this positive trend is expected to continue in the coming years.
Per a ResearchAndMarkets.com report, the global CRM software market, valued at $25.5 billion in 2018, is projected to reach $36.53 billion at a CAGR of 9.4% through 2022.
With its SaaS-based CRM and social enterprise applications, we think that salesforce is well-positioned to lead the market. Further, given the spurt in initiatives, the company looks set to play an instrumental role in the reinforcement of cloud computing, AI and other cutting-edge areas of tech innovation.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>