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salesforce (CRM) to Post Q4 Earnings: What's in the Cards?

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salesforce.com Inc. (CRM - Free Report) is slated to release fourth-quarter fiscal 2020 results on Feb 25.

For the fiscal fourth quarter, revenues are guided between $4.743 billion and $4.753 billion. The Zacks Consensus Estimate for sales of $4.75 billion indicates 31.8% growth from the prior-year quarter’s reported number.

Non-GAAP earnings per share are estimated in the band of 54-55 cents. The Zacks Consensus Estimate for earnings is pegged at 55 cents, implying 21.4% decline from the year-ago quarter’s reported figure.

The company delivered positive earnings surprise in the trailing four quarters, the beat being 32.88%, on average.

salesforce.com, inc. Price and EPS Surprise

salesforce.com, inc. Price and EPS Surprise

salesforce.com, inc. price-eps-surprise | salesforce.com, inc. Quote

So, let’s see how things have shaped up for this announcement.

Factors at Play

salesforce’s fourth-quarter fiscal 2020 performance is likely to have benefited from the robust demand environment as customers are undergoing a major digital transformation. The company’s ability to provide integrated solutions for customers’ business problems is expected to have remained the key driver.

The company’s performance is also likely to have gained from its firm focus on building and expanding relationships with leading brands across industries and geographies. Moreover, significant growth opportunity in the public sector is likely to have been a tailwind.

Growth across all its four major cloud service offerings, namely Sales Cloud, Service Cloud, Platform and other plus Marketing & Commerce Cloud is likely to have boosted the company’s subscription and support revenue stream, which is a major catalyst.

Additionally, the company expects to benefit from its strategic acquisitions, namely Tableau and Salesforce.org, which are likely to contribute approximately $320 million and $80 million, respectively, to revenues this earnings season.

However, stiff competition from Oracle and Microsoft is a concern. Besides, persistence of unfavorable currency fluctuations is a key headwind. Increasing investment in international expansions and data centers might have been an overhang on profitability.

What Our Model Says

The proven Zacks model does not predict an earnings beat for salesforce this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

salesforce has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks to Consider

Here are some stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Broadcom (AVGO - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Anterix (ATEX - Free Report) has an Earnings ESP of +3.57% and is Zacks #3 Ranked.

Applied Optoelectronics (AAOI - Free Report) has an Earnings ESP of +8.12% and is Zacks #3 Ranked.

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