Will Salesforce.com Miss Consensus Estimates For Q3?

CRM: Salesforce logo

Salesforce.com (NYSE: CRM) is scheduled to report its fiscal Q3 2022 (ended Oct 2021) results on Tuesday, November 30. We expect CRM to miss the consensus estimates for earnings but be in line with revenues. The company has reported better than expected revenue and earnings figures in each of the last four quarters. CRM’s revenue growth in H1 of FY 2022 was primarily due to the continuous demand of its cloud offerings as organizations continue their shift toward digitization. We expect the same to drive the third-quarter FY2022 results, as well.

Our forecast indicates that Salesforce’s valuation is $302 per share, which is 3.8% above the current market price of $291. Look at our interactive dashboard analysis on Salesforce’s pre-earnings: What To Expect in Q3? for more details. 

(1) Revenues expected to be in line of consensus estimates 

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Salesforce’s revenues for full-year 2021 were $21.3 billion – up 25%, with high growth primarily in the cloud offerings. Trefis estimates CRM’s fiscal Q3 2022 (ended Oct 2021) revenues to be around $6.80 billion, in line with the $6.79 billion consensus estimate. We expect cloud offerings to drive the growth in the Q3. Our dashboard on Salesforce’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.

(2) EPS likely to miss the consensus estimates

CRM’s Q3 2022 (ended Oct 2021) earnings per share (EPS) is expected to be $0.80 per Trefis analysis, below the consensus estimate of $0.92. The company’s net income margin rose in 2021 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 4% above the current market price

Going by our Salesforce’s valuation, with an FY 2023 EPS estimate of $2.55 and a P/E multiple of 118.2x, this translates into a price of $302, which is 3.8% above the current market price of $291.

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 CRM stock is likely to not move much in the near term, there are other stocks that look like a Better Bet Than CRM Stock. Also, salesforce.com Peer Comparisons summarizes how the company fares against peers on metrics that matter.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Nov 2021
MTD [1]
YTD [1]
Total [2]
CRM Return -2% 30% 322%
S&P 500 Return 3% 25% 110%
Trefis MS Portfolio Return -2% 49% 304%

[1] Month-to-date and year-to-date as of 11/26/2021
[2] Cumulative total returns since 2017

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