Salesforce.com (CRM) Gains But Lags Market: What You Should Know

Salesforce.com (CRM) closed at $255.97 in the latest trading session, marking a +0.38% move from the prior day. The stock lagged the S&P 500's daily gain of 0.47%. Meanwhile, the Dow gained 0.4%, and the Nasdaq, a tech-heavy index, added 0.33%.

Heading into today, shares of the customer-management software developer had gained 4.06% over the past month, lagging the Computer and Technology sector's gain of 6.61% and outpacing the S&P 500's gain of 3.42% 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 $0.74 per share. This would mark a year-over-year decline of 1.33%. Meanwhile, our latest consensus estimate is calling for revenue of $5.25 billion, up 16.25% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.74 per share and revenue of $20.77 billion, which would represent changes of +25.08% and +21.48%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CRM. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. CRM is currently sporting a Zacks Rank of #1 (Strong Buy).

Investors should also note CRM's current valuation metrics, including its Forward P/E ratio of 68.13. Its industry sports an average Forward P/E of 33.66, so we one might conclude that CRM is trading at a premium comparatively.

Also, we should mention that CRM has a PEG ratio of 4.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 2.69 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 58, putting it in the top 23% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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