Is It Too Late to Buy Salesforce Stock? | The Motley Fool.: Fiscal Q1 Earnings Snapshot
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Historically, Salesforce has been a great investment. But winners often keep on winning, and Salesforce still looks like a good stock to buy. Here's why. Consumers interact with businesses in a variety of ways: marketing content, online stores, sales personnel, customer service agents, and many more. All of those interactions create valuable data, but the data is typically stored in different places. Put another way, even though sales and marketing teams may interact with the same customers, the data is stored with separate departments.
Salesforce's customer relationship management CRM platform solves that problem. Its allows clients to unify data from sales, services, marketing, and commerce, helping all enterprise teams collaborate and work more productively. Ultimately, that translates into better customer engagement, which often leads to greater profitability.
Providing a high-quality customer experience has always been important, but the pandemic-driven digital acceleration has made it even more necessary.
Put simply, the critical need for strong customer relationships has created a big opportunity for Salesforce. Salesforce's leadership position in the CRM market has helped it grow revenue quickly. Data source: Salesforce SEC filings. Note: Fiscal ended Jan. Salesforce benefits from a cost-efficient SaaS business model. Also noteworthy is the company's healthy balance sheet. That strong financial position makes Salesforce's business agile and resilient.
In the 20 years since then, the company's innovative culture has helped it dramatically expand its portfolio of products. And today Salesforce is just as innovative as ever. For example, Salesforce Einstein is an artificial intelligence engine that automates certain tasks and make predictive recommendations.
That helps clients work more productively, which boosts profits more often than not. Notably, research firm Gartner recently recognized Salesforce as the leading provider of sales force automation solutions. Likewise, the Salesforce low-code platform empowers virtually anyone to build applications, even if they don't know computer code.
But the truly innovative part of the platform is its support for blockchain applications. Blockchain technology -- best known for its record-keeping role in cryptocurrency -- is a highly secure and decentralized way of verifying and storing data, and it has the potential to transform many industries.
Those are just two examples, but the point is this: Salesforce's innovative culture is a valuable asset, and it should keep the company on the cutting edge of the CRM market. For the fourth quarter, Salesforce expects its revenue to rise That narrowly missed analysts' expectations for For the full year, Salesforce expects its revenue to rise That's slightly higher than the midpoint of its investor day forecast for Salesforce's mixed revenue forecasts for the fourth and first quarters seemingly triggered its post-earnings sell-off.
That forecast implies Salesforce's annual revenue will continue to increase at a compound annual growth rate CAGR of Salesforce's adjusted operating margin declined 60 basis points sequentially and stayed flat year-over-year at However, analysts expected Salesforce's adjusted EPS to stay flat year-over-year on that basis in the fourth quarter.
Salesforce attributed that softer-than-expected EPS guidance to its acquisition of Slack and other investments. On the bright side, Salesforce raised its full-year adjusted operating margin guidance from Salesforce's recent forecasts were mixed, but its commitment to its fiscal targets indicates that it remains a solid secular growth stock.
Salesforce's customer relationship management CRM subscriptions are sticky, and it continues to cross-sell additional marketing, e-commerce, app development, communication, and analytics services to its locked-in customers.
It's the largest cloud-based CRM provider by a mile, its pricing power insulates it from inflation, and it's performed well during previous recessions. The company's stock also looks reasonably valued at 65 times forward earnings and nine times next year's sales. Salesforce's strengths easily outweigh its weaknesses. Therefore, I believe it's still a solid investment for investors who can look past the short-term noise related to its acquisitions and focus on its long-term strengths. Cost basis and return based on previous market day close.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of Discounted offers are only available to new members. Calculated by Time-Weighted Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
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