How Will Second Quarter Results Impact Salesforce’s Stock?

CRM: Salesforce logo
Salesforce (NYSE: CRM) is scheduled to report its fiscal Q2 2022 (ended July 2021) results on Wednesday, August 25. 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 Q1 of FY 2022 as its cloud offerings continued to be in demand as organizations continue their shift toward digitization and remote working. We expect the same to drive the second-quarter FY2022 results, as well.

Our forecast indicates that Salesforce’s valuation is $282 per share, which is 14% above the current market price of $247. Look at our interactive dashboard analysis on Salesforce’s pre-earnings: What To Expect in Q2? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q2

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Trefis estimates CRM’s fiscal Q2 2022 (ended July 2021) revenues to be around $6.9 billion, above the $6.24 billion consensus estimate. In Q1 2022, CRM’s revenue was $5.96 billion, up 23% y-o-y. The company’s revenue has grown consistently across the last few quarters. 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 Q2 2022 (ended July 2021) earnings per share (EPS) is expected to be $0.50 per Trefis analysis, slightly above the consensus estimate of $0.46. 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. In FY 2022, we expect the company to have net income margin of around 7.4% which would mean an EPS of $2.08 in FY2022.

(3) Stock price estimate 14% above the current market price

Going by our Salesforce’s valuation, with an EPS estimate of $2.08 and a P/E multiple of 136x in fiscal 2022, translates into a price of $282, which is 14% above the current market price of $247.

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

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