Why Including Salesforce in Your Portfolio Makes Sense


Following a robust performance in its third-quarter fiscal 2024 earnings release, Salesforce’s (NYSE:CRM) shares experienced a significant 22% surge, indicative of investors’ confidence in the company’s robust fundamentals and its prominent position in the customer relationship management solutions market.

With a strong foundation, Salesforce remains an attractive investment option at the current juncture.

Reasons to Invest in CRM Stock

Consistent Earnings Surprises: Salesforce has consistently surpassed earnings estimates in the last four quarters, boasting an average surprise of 10.86%. This reflects a commendable track record of outperforming earnings expectations.

Healthy Growth Projections: The Consensus Estimate for fiscal 2024 earnings stands at $8.20 per share, signaling a notable 56.5% YoY growth. Looking ahead to fiscal 2025, the consensus mark for earnings is $9.51 per share, reflecting a 16% YoY increase. Additionally, the company holds a long-term earnings growth expectation of 21.50%.

Upward Revisions: Over the past 60 days, the Consensus Estimate for fourth-quarter fiscal 2024 earnings has been adjusted upward by 9 cents to $2.26 per share. Similarly, the consensus mark for fiscal 2024 earnings has seen a positive revision of 14 cents to $8.20 per share during the same period.

Attractive Valuation: Currently, Salesforce trades at a compelling valuation multiple, with a one-year forward price-to-earnings ratio of 29.64X, compared to its five-year average of 114.31X.

Long-Term Growth Drivers

Popular Product Portfolio: Salesforce’s products, including Data Cloud, Sales Cloud, and Service Cloud, are gaining popularity, especially as global corporations increasingly rely on cloud-based solutions. Products like Tableau and Mulesoft in the customer relationship management space are aligning with customer needs and significantly contributing to the company’s revenue.

AI Initiatives: Salesforce’s foray into the generative AI space with Einstein GPT Copilot solutions, incorporating artificial intelligence, customer relationship management, data, and security, positions the company prominently in the evolving AI market. The launch of Einstein GPT in March 2023 and subsequent additions like Einstein Copilot and Copilot Studio demonstrate the company’s commitment to innovation.

Strategic Partnerships: Deepening partnerships with industry giants such as Alphabet, Apple, and Amazon enhance Salesforce’s position in the global business landscape. Collaborations with Alphabet’s Google, Apple, and Amazon Web Services underscore Salesforce’s commitment to creating connections and expanding its reach.

Acquisitions as Growth Strategy: Salesforce’s strategic acquisitions, such as Airkit.ai, an AI-powered customer service app development startup, bolster the company’s presence in the AI and customer relationship management software domain.

In summary, despite macroeconomic challenges and geopolitical disruptions, Salesforce’s consistent growth, strategic initiatives, and strong partnerships make it a compelling choice for investors. The company’s third-quarter 2023 revenues, growing 11% YoY to $8.7 billion, further highlight its resilience and continued success.

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About the author: Stephanie Bédard-Châteauneuf has over seven years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, market news, and personal finance. She has an MBA in finance.