Salesforce.com’s Stock To Rise With An Earnings Beat?

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Salesforce.com (NYSE: CRM) is scheduled to report its fiscal Q1 2022 (ended April 2021) results on Thursday, May 27. We expect CRM to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenue and earnings figures in each of the last four quarters. CRM’s revenue growth continued in the pandemic year as its cloud offerings continued to be in demand particularly due to the increase in digitization and remote working. We expect the same to drive the first-quarter FY2021 results, as well.

Our forecast indicates that Salesforce’s valuation is $276 per share, which is 24% above the current market price of $223. Look at our interactive dashboard analysis on Salesforce’s pre-earnings: What To Expect in Q1? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q1

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Trefis estimates CRM’s fiscal Q1 2022 (ended April 2021) revenues to be around $5.9 billion, above the $5.68 billion consensus estimate. CRM’s revenues of $21.3 billion for the full year 2021 (ended January 2021) were above its FY 2020 figure. The company’s revenue grew consistently across quarters in the previous year. Overall, we expect revenue of around $26.8 billion in FY2022. Our dashboard on Salesforce’s revenues offers more details on the company’s segments.

(2) EPS likely to beat the consensus estimates

CRM’s Q1 2021 earnings per share (EPS) is expected to be $0.76 per Trefis analysis, slightly above the consensus estimate of $0.75. The company’s net income margin rose in 2020 primarily due to a $1.5 billion of tax benefit which increased the diluted EPS figure from $0.15 in FY 2020 to $4.38 in FY 2021. The removal of lockdowns and steady growth in the rate of vaccination has contributed to a revival in demand across sectors. Altogether, the company is likely to report an EPS of around $2.08 in FY2021.

(3) Stock price estimate 24% above the current market price

Going by our Salesforce’s valuation, with an EPS estimate of around $2.08 and a P/E multiple of around 133x in fiscal 2021, translates into a price of $276, which is 24% above the current market price of $223.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

While Salesforce may have moved, for further comparison among peer groups, it is helpful to see how they stack up. Salesforce Comparison With Peers summarizes how Salesforce compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

See all Trefis Price Estimates and Download Trefis Data here

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