Will You Be Comfortable Buying Salesforce Stock?
The stock looks fairly priced at the moment, though history suggests you may benefit from buying dips. Consider the following data:
- Size: A $233 Bil company with $40 Bil in revenue currently trading at $244.01.
- Fundamentals: Last 12 month revenue growth of 8.3% and operating margin of 21.2%.
- Liquidity: Has Debt to Equity ratio of 0.0 and Cash to Assets ratio of 0.2
- Valuation: Currently trading at P/E multiple of 35.0 and P/EBIT multiple of 27.8
- Has returned (median) 60.5% within a year following sharp dips since 2010. See CRM Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for CRM, see Buy or Sell CRM Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and CRM drops another 20-30% to $170.81 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Salesforce (CRM) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: CRM provides customer relationship management technology and a platform that enables connected experiences across industries like financial services, healthcare, and manufacturing worldwide.
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2022 Inflation Shock
- CRM stock fell 58.6% from a high of $309.96 on 8 November 2021 to $128.27 on 16 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 1 March 2024
- Since then, the stock increased to a high of $367.87 on 4 December 2024 , and currently trades at $244.01
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -58.6% | -25.4% |
| Time to Full Recovery | 441 days | 464 days |
2020 Covid Pandemic
- CRM stock fell 35.7% from a high of $193.36 on 20 February 2020 to $124.30 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 July 2020
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -35.7% | -33.9% |
| Time to Full Recovery | 112 days | 148 days |
2018 Correction
- CRM stock fell 24.8% from a high of $160.43 on 27 September 2018 to $120.67 on 20 November 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 12 February 2019
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -24.8% | -19.8% |
| Time to Full Recovery | 84 days | 120 days |
2008 Global Financial Crisis
- CRM stock fell 70.5% from a high of $18.61 on 23 June 2008 to $5.49 on 19 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 29 December 2009
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -70.5% | -56.8% |
| Time to Full Recovery | 405 days | 1480 days |
Worried that CRM could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.