Would You like a feature Interview?
All Interviews are 100% FREE of Charge
Shares of cloud software maker Salesforce (CRM) have risen more than 40% in the past three months. Strong financial performance and bullish outlook, along with his advances in AI integration, have fueled investor sentiment in CRM recently. Therefore, this software stock might be an ideal buy given its promising growth prospects and high profitability. Continue reading….
Despite macroeconomic volatility, the software industry has emerged as a huge engine in the global economy. The exponential growth in the volume of enterprise data, coupled with increasing automation of business operations across various end-use sectors, is driving demand for business software and services.
Additionally, the proliferation of artificial intelligence (AI) and machine learning technologies in software development is poised to reap significant benefits from the software industry. Given the industry outlook, Salesforce, Inc. (CRM) could be a notable software stock to add to your portfolio. Let’s dig deeper into why.
CRM is a customer relationship management platform. His Customer 360 platform acts as a conduit to link customer data across various systems, applications, and devices. This integrated solution enables businesses to sell, service, market and commerce virtually anywhere.
CRM expanded rapidly during the pandemic, keeping pace with the rapid adoption of cloud technology. The company’s strategic acquisitions of Slack and Tableau also contributed to the company’s growth trajectory.
Cloud software maker CRM posted impressive fourth quarter and full year results. CRM Chairman Marc Benioff said: CEO.
“Operating cash flow in FY23 reached $7.1 billion, up 19% year-over-year. This is our best cash flow ever and one of the best cash flows of any enterprise software company our size. it is,” he added.
CRM’s relentless focus on execution and proactive management of the current macro environment enabled the company to close out a strong year and continue to deliver strong growth in 2024.
CRM revenue is expected to be in the range of $8.16 billion to $8.18 billion in the first quarter and $34.5 billion to $34.7 billion in fiscal 2024. The company also expects first-quarter non-GAAP earnings per share of $1.60 to $1.61. $7.12 and $7.14 for the whole year.
CRM’s share price is up 16.7% over the past month and 44.8% over the past three months to close its last trading session at $188.68. Moreover, the stock is trading higher than his 50-day and 200-day moving averages of $167.61 and $161.45.
Let’s dig deeper into what makes CRM an attractive investment.
positive latest developments
On March 7, 2023, CRM transformed the CRM technology landscape with Einstein GPT, the world’s first generative AI CRM technology. This innovation employs generative AI to revolutionize the customer experience by delivering AI-generated content at hyperscale across all sales, service, marketing, commerce and IT interactions.
Additionally, the company announced the Generative AI Fund, a $250 million investment fund from its global investment arm, Salesforce Ventures. The fund aims to support the startup ecosystem, back high-potential businesses, and accelerate the development of trustworthy generative AI. The move could prove beneficial for the company amid the burgeoning AI boom.
Also on January 12, the CRM was designed to help retailers optimize and enhance ad sales, get a holistic view of transactions across both online and offline stores, and extract value from customer data. We announced a series of new features. Implementing these innovations can empower retailers and drive company performance forward.
solid finances
In the fourth quarter of fiscal 2023, which ended January 31, CRM total revenue was $8.38 billion, up 14.4% year-over-year. Gross profit increased 18.3% year over year to $6.28 billion. Also, the company’s non-GAAP operating income increased 123.3% from the year-ago quarter to $2.45 billion.
Additionally, CRM non-GAAP net income increased 96.4% year-over-year to $1.66 billion and non-GAAP EPS increased 100% year-over-year to $1.68.Additionally, as of January 31, 2023, CRM cash and cash equivalents $7.02 billion, compared with $5.46 billion as of January 31, 2022.
Favorable Analyst Quote
Analysts expect CRM revenue to grow 10.4% year-over-year to $34.62 billion in the fiscal year ending January 2024. His EPS for the company this year is expected to be $7.13, up 36% from the same period last year. CRM also beat consensus earnings and EPS estimates in all four of his subsequent quarters. This is impressive.
Additionally, the company’s revenue and EPS for the next fiscal year (ending January 2025) are expected to grow 11.2% and 22.4% year-over-year to $38.5 billion and $8.72, respectively.
high profitability
CRM’s gross profit margin over the last 12 months was 73.34%, 46.2% higher than the industry average of 50.17%. His EBITDA margin over the last 12 months was 17.34%, 75.8% above the industry average of 9.9%. Similarly, the trailing 12-month leverage FCF margin for the stock was 32.60%, 436.4% higher than the industry average of 6.08%.
Additionally, CRM’s operating cash over the last 12 months was $7.11 billion, well above the industry average of $39.76 million. Also, his CAPEX/Sales of 2.55% over the last 12 months compares to the industry average of 2.44%.
POWR Rating Shows Promise
A strong foundation for CRM is POWR ratingThe stock has an overall rating of B, which is equivalent to a buy in our proprietary rating system. The POWR Rating is calculated by considering 118 different factors, each of which is optimally weighted.
Our proprietary rating system also evaluates each stock based on eight different categories. CRM earns an A grade for growth and sentiment, consistent with its strong financial position and favorable analyst expectations.
In addition, the stock has a B grade of quality that is consistent with higher profitability than the industry. CRM ranks 19th out of 134 stocks. software application industry. click here Access CRM value, momentum, and stability ratings.
Software – See all the top stocks in the applications industry here.
Conclusion
CRM revenue has increased significantly over the past three years, growing at a CAGR of 22.4%. Also, the company’s EBITDA and net profit increased at his CAGR of 27.9% and 18.2% respectively over the same period.
The company’s commitment to implementing cutting-edge technological solutions for its clients has contributed to its remarkable success in recent years. Moreover, it is expected to witness significant growth and expansion in fiscal year 2024 due to the increasing adoption of AI.
Given CRM’s strong financial performance, solid growth prospects, and high profitability, this software stock could be an ideal investment right now.
How does Salesforce, Inc. (CRM) compare to peers?
The overall CRM rating is B, which is equivalent to a purchase. Check out other A (strong buy) rated stocks in the software – applications industry: Commvault Systems, Inc.CVLTs), Progress Software Inc. (PRGS), and IBEX Ltd (ibex).
what next?
Get this special report.
What gives these stocks the right ingredients to be big winners, even in this brutal stock market?
First, because they are all low-priced companies with the most upside potential in today’s volatile market.
But more importantly, they’re all top-rated buy-rated stocks according to the coveted POWR rating system, outperforming in key areas of growth, sentiment, and momentum.
Click below now to see three exciting stocks that could more than double in the next year.
CRM shares traded at $188.76 per share on Wednesday afternoon, up $0.09 (+0.05%). Year-to-date, the CRM is up 42.36% for him, while the S&P 500 Index is up 4.68% for him over the same period.
About the Author: Aanchal Sugandh
Aanchal’s passion for the financial markets drives her work as an investment analyst and journalist. She has a bachelor’s degree in finance and is working on the CFA program. Her fundamental analysis skills make her adept at assessing the long-term outlook of stocks. Her goal is to help investors build portfolios that deliver sustainable returns.
post This software stock is a buy signal first appeared StockNews.com