Salesforce.com (CRM) reported quarterly earnings of $2.56 per share, beating the Zacks Consensus Estimate of $2.35 per share. This compares to earnings of $2.12 per share a year ago. These figures are adjusted for one-time items.
This quarterly report represents an earnings surprise of 8.94%. A quarter ago, it was expected that this customer management software developer would report earnings of $2.38 per share when it actually produced earnings of $2.44, representing a surprise of 2.52%.
Over the past four quarters, the company has beaten consensus earnings per share estimates four times.
Salesforce.com, which belongs to the Zacks Computer Software industry, posted revenues of $9.33 billion for the quarter ending July 2024, surpassing the Zacks Consensus Estimate by 1.04%. This compares to year-ago revenues of $8.6 billion. The company has surpassed consensus revenue estimates three times in the last four quarters.
The sustainability of the stock’s immediate price movement based on the recently released numbers and future earnings expectations will primarily depend on management’s comments in the earnings call.
Salesforce.com shares have gained about 0.4 percent since the beginning of the year, while the S&P 500 has gained 17.9 percent.
What’s next for Salesforce.com?
While Salesforce.com has lagged the market so far this year, investors are asking themselves: what’s next for the stock?
There are no easy answers to this important question, but one reliable measure that can help investors is the company’s earnings outlook. This includes not only the current consensus expectations for the coming quarters, but also how these expectations have changed recently.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the forecast revisions for Salesforce.com are trending Unfavorable. While the magnitude and direction of forecast revisions could change following the company’s just-released earnings report, the current status equates to a Zacks Rank #4 (Sell) for the stock. So, shares are expected to underperform the market in the near future. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the coming days. The current consensus earnings per share estimate is $2.42 on revenues of $9.41 billion for the coming quarter and $9.90 on revenues of $37.82 billion for the current fiscal year.
Investors should be aware that the outlook for the industry can also have a significant impact on the stock’s performance. In terms of the Zacks Industry Rank, Computer – Software is currently in the top 27% of the 250+ Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Descartes Systems (DSGX), another stock in the same industry, has not yet announced results for the quarter ending July 2024. Earnings are expected to be released on September 4.
This logistics provider is expected to report quarterly earnings at $0.43 per share in its upcoming report, representing a change of +34.4% year over year. The consensus earnings per share estimate for the quarter has remained unchanged over the past 30 days.
Descartes Systems’ revenue is expected to be $158.9 million, an increase of 10.8% over the same quarter last year.
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