NYSE:CRM is not too expensive for the growth it is showing.

SALESFORCE INC (NYSE:CRM) was identified as an affordable growth stock by our stock screener. NYSE:CRM is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

ChartMill's Evaluation of Growth

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:CRM has received a 8 out of 10:

• The Earnings Per Share has grown by an impressive 60.98% over the past year.
• CRM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 31.21% yearly.
• Looking at the last year, CRM shows a quite strong growth in Revenue. The Revenue has grown by 12.79% in the last year.
• The Revenue has been growing by 24.36% on average over the past years. This is a very strong growth!
• CRM is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 20.34% yearly.
• CRM is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.76% yearly.

Looking at the Valuation

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:CRM has earned a 6 for valuation:

• 77.54% of the companies in the same industry are more expensive than CRM, based on the Price/Earnings ratio.
• 77.54% of the companies in the same industry are more expensive than CRM, based on the Price/Forward Earnings ratio.
• CRM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. CRM is cheaper than 84.06% of the companies in the same industry.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of CRM indicates a rather cheap valuation: CRM is cheaper than 80.43% of the companies listed in the same industry.
• CRM's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• CRM has a very decent profitability rating, which may justify a higher PE ratio.
• CRM's earnings are expected to grow with 28.78% in the coming years. This may justify a more expensive valuation.

Assessing Health Metrics for NYSE:CRM

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:CRM, the assigned 5 reflects its health status:

• CRM has an Altman-Z score of 4.19. This indicates that CRM is financially healthy and has little risk of bankruptcy at the moment.
• With a decent Altman-Z score value of 4.19, CRM is doing good in the industry, outperforming 71.38% of the companies in the same industry.
• The Debt to FCF ratio of CRM is 1.25, which is an excellent value as it means it would take CRM, only 1.25 years of fcf income to pay off all of its debts.
• With a decent Debt to FCF ratio value of 1.25, CRM is doing good in the industry, outperforming 77.54% of the companies in the same industry.
• CRM has a Debt/Equity ratio of 0.15. This is a healthy value indicating a solid balance between debt and equity.

Profitability Examination for NYSE:CRM

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:CRM scores a 7 out of 10:

• CRM's Return On Assets of 1.71% is fine compared to the rest of the industry. CRM outperforms 77.54% of its industry peers.
• Looking at the Return On Equity, with a value of 2.72%, CRM is in the better half of the industry, outperforming 78.26% of the companies in the same industry.
• Looking at the Return On Invested Capital, with a value of 3.77%, CRM is in the better half of the industry, outperforming 78.62% of the companies in the same industry.
• The 3 year average ROIC (0.90%) for CRM is below the current ROIC(3.77%), indicating increased profibility in the last year.
• CRM has a Profit Margin of 4.77%. This is amongst the best in the industry. CRM outperforms 80.80% of its industry peers.
• CRM has a better Operating Margin (12.98%) than 84.42% of its industry peers.
• CRM's Operating Margin has improved in the last couple of years.
• CRM has a Gross Margin of 74.52%. This is in the better half of the industry: CRM outperforms 67.75% of its industry peers.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

Our latest full fundamental report of CRM contains the most current fundamental analsysis.

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.