SALESFORCE INC (CRM) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:CRM - US79466L3024 - Common Stock
212.93 USD
-15.03 (-6.59%)
We assign a fundamental rating of 6 out of 10 to CRM. CRM was compared to 278 industry peers in the Software industry. While CRM has a great profitability rating, there are some minor concerns on its financial health. CRM has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
- CRM had positive earnings in the past year.
- CRM had a positive operating cash flow in the past year.
- In the past 5 years CRM has always been profitable.
- CRM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- CRM's Return On Assets of 7.59% is fine compared to the rest of the industry. CRM outperforms 78.06% of its industry peers.
- CRM has a Return On Equity of 12.03%. This is in the better half of the industry: CRM outperforms 75.54% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 10.05%, CRM belongs to the top of the industry, outperforming 84.89% of the companies in the same industry.
- CRM had an Average Return On Invested Capital over the past 3 years of 5.83%. This is below the industry average of 10.76%.
- The last Return On Invested Capital (10.05%) for CRM is above the 3 year average (5.83%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.59% | ||
| ROE | 12.03% | ||
| ROIC | 10.05% |
ROA(3y)3.46%
ROA(5y)3.61%
ROE(3y)5.81%
ROE(5y)5.94%
ROIC(3y)5.83%
ROIC(5y)3.79%
1.3 Margins
- With an excellent Profit Margin value of 17.91%, CRM belongs to the best of the industry, outperforming 80.58% of the companies in the same industry.
- CRM's Profit Margin has improved in the last couple of years.
- CRM has a Operating Margin of 22.03%. This is amongst the best in the industry. CRM outperforms 88.49% of its industry peers.
- In the last couple of years the Operating Margin of CRM has grown nicely.
- Looking at the Gross Margin, with a value of 77.73%, CRM is in the better half of the industry, outperforming 74.82% of the companies in the same industry.
- CRM's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 22.03% | ||
| PM (TTM) | 17.91% | ||
| GM | 77.73% |
OM growth 3Y107.25%
OM growth 5Y49.51%
PM growth 3Y44.23%
PM growth 5Y85.88%
GM growth 3Y1.66%
GM growth 5Y0.52%
2. Health
2.1 Basic Checks
- CRM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
- The number of shares outstanding for CRM has been reduced compared to 1 year ago.
- The number of shares outstanding for CRM has been increased compared to 5 years ago.
- CRM has a better debt/assets ratio than last year.
2.2 Solvency
- CRM has an Altman-Z score of 4.74. This indicates that CRM is financially healthy and has little risk of bankruptcy at the moment.
- The Altman-Z score of CRM (4.74) is better than 71.58% of its industry peers.
- CRM has a debt to FCF ratio of 0.65. This is a very positive value and a sign of high solvency as it would only need 0.65 years to pay back of all of its debts.
- CRM's Debt to FCF ratio of 0.65 is fine compared to the rest of the industry. CRM outperforms 77.70% of its industry peers.
- CRM has a Debt/Equity ratio of 0.14. This is a healthy value indicating a solid balance between debt and equity.
- CRM's Debt to Equity ratio of 0.14 is in line compared to the rest of the industry. CRM outperforms 49.64% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.14 | ||
| Debt/FCF | 0.65 | ||
| Altman-Z | 4.74 |
ROIC/WACC0.92
WACC10.95%
2.3 Liquidity
- A Current Ratio of 0.98 indicates that CRM may have some problems paying its short term obligations.
- CRM has a Current ratio of 0.98. This is in the lower half of the industry: CRM underperforms 75.54% of its industry peers.
- A Quick Ratio of 0.98 indicates that CRM may have some problems paying its short term obligations.
- CRM's Quick ratio of 0.98 is on the low side compared to the rest of the industry. CRM is outperformed by 74.10% of its industry peers.
- CRM does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.98 | ||
| Quick Ratio | 0.98 |
3. Growth
3.1 Past
- CRM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.76%, which is quite good.
- Measured over the past years, CRM shows a very strong growth in Earnings Per Share. The EPS has been growing by 27.71% on average per year.
- The Revenue has grown by 8.41% in the past year. This is quite good.
- The Revenue has been growing by 17.25% on average over the past years. This is quite good.
EPS 1Y (TTM)18.76%
EPS 3Y28.52%
EPS 5Y27.71%
EPS Q2Q%34.85%
Revenue 1Y (TTM)8.41%
Revenue growth 3Y12.67%
Revenue growth 5Y17.25%
Sales Q2Q%8.63%
3.2 Future
- The Earnings Per Share is expected to grow by 14.75% on average over the next years. This is quite good.
- CRM is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.51% yearly.
EPS Next Y16.58%
EPS Next 2Y14%
EPS Next 3Y13.91%
EPS Next 5Y14.75%
Revenue Next Year9.34%
Revenue Next 2Y10.17%
Revenue Next 3Y9.88%
Revenue Next 5Y9.51%
3.3 Evolution
- The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- CRM is valuated rather expensively with a Price/Earnings ratio of 18.48.
- Compared to the rest of the industry, the Price/Earnings ratio of CRM indicates a somewhat cheap valuation: CRM is cheaper than 74.10% of the companies listed in the same industry.
- CRM's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.60.
- Based on the Price/Forward Earnings ratio of 16.08, the valuation of CRM can be described as correct.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of CRM indicates a somewhat cheap valuation: CRM is cheaper than 76.62% of the companies listed in the same industry.
- When comparing the Price/Forward Earnings ratio of CRM to the average of the S&P500 Index (25.83), we can say CRM is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.48 | ||
| Fwd PE | 16.08 |
4.2 Price Multiples
- CRM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. CRM is cheaper than 80.22% 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 81.30% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.72 | ||
| EV/EBITDA | 17.26 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- The excellent profitability rating of CRM may justify a higher PE ratio.
- A more expensive valuation may be justified as CRM's earnings are expected to grow with 13.91% in the coming years.
PEG (NY)1.11
PEG (5Y)0.67
EPS Next 2Y14%
EPS Next 3Y13.91%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.73%, CRM is not a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 0.54, CRM pays a better dividend. On top of this CRM pays more dividend than 90.29% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, CRM's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.73% |
5.2 History
- CRM is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- CRM pays out 21.86% of its income as dividend. This is a sustainable payout ratio.
DP21.86%
EPS Next 2Y14%
EPS Next 3Y13.91%
SALESFORCE INC / CRM FAQ
What is the ChartMill fundamental rating of SALESFORCE INC (CRM) stock?
ChartMill assigns a fundamental rating of 6 / 10 to CRM.
What is the valuation status for CRM stock?
ChartMill assigns a valuation rating of 6 / 10 to SALESFORCE INC (CRM). This can be considered as Fairly Valued.
Can you provide the profitability details for SALESFORCE INC?
SALESFORCE INC (CRM) has a profitability rating of 8 / 10.
What is the valuation of SALESFORCE INC based on its PE and PB ratios?
The Price/Earnings (PE) ratio for SALESFORCE INC (CRM) is 18.48 and the Price/Book (PB) ratio is 3.38.
How financially healthy is SALESFORCE INC?
The financial health rating of SALESFORCE INC (CRM) is 6 / 10.