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Salesforce.com (CRM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Salesforce.com (CRM) closed at $183.98 in the latest trading session, marking a +0.67% move from the prior day. This change outpaced the S&P 500's 0.11% gain on the day. Elsewhere, the Dow lost 0.09%, while the tech-heavy Nasdaq added 0.2%.

Heading into today, shares of the customer-management software developer had gained 11.94% over the past month, outpacing the Computer and Technology sector's gain of 6.56% and the S&P 500's gain of 3.25% in that time.

Wall Street will be looking for positivity from CRM as it approaches its next earnings report date. In that report, analysts expect CRM to post earnings of $0.55 per share. This would mark a year-over-year decline of 21.43%. Meanwhile, our latest consensus estimate is calling for revenue of $4.75 billion, up 31.84% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.89 per share and revenue of $17 billion, which would represent changes of +5.09% and +27.99%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for CRM. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.08% higher. CRM is currently a Zacks Rank #2 (Buy).

Investors should also note CRM's current valuation metrics, including its Forward P/E ratio of 63.18. Its industry sports an average Forward P/E of 33.51, so we one might conclude that CRM is trading at a premium comparatively.

We can also see that CRM currently has a PEG ratio of 3.37. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Computer - Software stocks are, on average, holding a PEG ratio of 2.29 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 64, putting it in the top 26% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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