Salesforce.com (CRM) Earnings Prep: Q3 Report Expected Tuesday

in EARNINGS/INVESTING IDEAS by

Salesforce.com, inc. (NYSE:CRM) is scheduled to report Q3 earnings results on December 3, 2019, at 2:00 PM PT.

The company is expected to report earnings of $0.66/share on revenue of $4.448 billion. The consensus earnings per share (EPS) of $0.66/share is based on a poll of 39 analysts and represents a growth of 8.2% over the same quarter last year when the company reported earnings of $0.61/share.

The revenue forecast of $4.448 billion based on a poll of 35 analysts implies a year-over-year (YoY) growth of 31.1%. Last year the company reported $3.392 billion in revenue for the quarter.

Expected to report EPS growth of $0.05/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $4,447.84 $3,392.00 31.1%
EPS $0.66 $0.61 8.2%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from salesforce.com for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.47 $0.66 40.4% Beat
Q1, 2020 $0.61 $0.93 52.5% Beat
Q4, 2019 $0.55 $0.70 27.3% Beat
Q3, 2019 $0.50 $0.61 22.0% Beat
Q2, 2019 $0.47 $0.71 51.1% Beat
Q1, 2019 $0.46 $0.74 60.9% Beat
Q4, 2018 $0.33 $0.35 6.1% Beat
Q3, 2018 $0.37 $0.39 5.4% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to salesforce.com’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 31, 2019, the stock price reacted by increasing by 2.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-22 $147.38 $151.57 2.8% Increase
2019-06-04 $145.10 $158.44 9.2% Increase
2019-03-04 $164.53 $156.97 -4.6% Decline
2018-11-27 $126.41 $140.64 11.3% Increase

Fundamentals And Technical Analysis

salesforce.com is currently trading at $161/share, down -1.2% for the day. The company is trading at approximately 96.1% of its 52-week high of $167.56/share. The company’s stock price is up 6.2% since the last earnings report and down -0.9% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 59.31 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 150.1x and a forward P/E multiple of 58.5x. Salesforce.com’s current share price also implies a price-to-book (P/B) multiple of 8.3x. The following table summarizes some other key fundamental ratios:

Data as of December 3, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date July 31, 2019
Stock Price (Current) $161
P/E Ratio 150.1x
P/E Ratio (Fwd) 58.5x
PEG Ratio 2.8
Total Debt to Capital (%) 4.3%
Levered Free Cash Flow $3.235 billion
Enterprise Value / EBITDA 69.3x

Source: Finbox

Company Profile: salesforce.com, inc.

Salesforce.com, inc. is a large-cap stock with a market capitalization of $140.9 billion and a total enterprise value of $141.3 billion. The company operates in the Information Technology sector and Software industry.

Salesforce.com, inc. develops enterprise cloud computing solutions with a focus on customer relationship management worldwide. The company offers Sales Cloud to store data, monitor leads and progress, forecast opportunities, and gain insights through analytics and relationship intelligence, as well as deliver quotes, contracts, and invoices.

It also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as a field service solution that enables companies to connect agents, dispatchers, and mobile employees through a centralized platform, which helps to schedule and dispatch work, and track and manage jobs in real-time.

In addition, the company offers Marketing Cloud to plan, personalize, and optimize one-to-one customer marketing interactions; and Commerce Cloud, which enables companies to enhance engagement, conversion, revenue, and loyalty from their customers.

Further, it provides Lightning Platform that offers no-code to pro-code Platform-as-a-Service tools for building, securing, integrating, and managing the business apps; Anypoint Platform enables customers to connect any system, application, data, or device; Quip collaboration platform, which combines documents, spreadsheets, apps, and chat with live CRM data; and Salesforce Customer 360, which enables companies to connect customer data across the various offerings for financial services, healthcare, and government.

Additionally, the company offers consulting and implementation services; training services, including instructor-led and online courses; and support and adoption programs. It provides its services through direct sales; and consulting firms, systems integrators, and other partners.

The company was founded in 1999 and is headquartered in San Francisco, California.

 

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