Is Salesforce (CRM) a Lucrative Purchase This Week?

Salesforce, Inc. Shows Promise with Generative AI Ecosystem

Despite facing macroeconomic challenges, the tech industry continues to experience rapid advancements that could influence its future prospects. In light of its strong Q1 performance, investors may consider whether or not it’s worth investing in Salesforce, Inc. (CRM) moving forward. The company’s artificial intelligence (AI) operations, which includes its recent announcement of Slack GPT, show significant promise. Slack GPT, an AI experience natively integrated into Slack, has the ability to use generative AI app integrations, language models, and secure customer data insights from the Customer 360 and Data Cloud.

Why Salesforce, Inc. Could Be a Good Investment

CRM’s financials, profitability, historical growth, and analyst estimates indicate that it may be a smart investment choice. In Q1 that ended April 30th, CRM’s total revenues increased 11.3% year-over-year to $8.25 billion and its non-GAAP income from operations increased by 73.9% to $2.27 billion. Its non-GAAP net income also increased by 70.5% year-over-year to $1.67 billion. Additionally, with a CAGR of 20.9% over the past three years, the company shows strong historical growth. Its 73.8% trailing-12-month gross profit margin is 50.6% higher than the industry average and has proven to be more profitable than the industry average in general, with a trailing-12-month EBITDA margin of 20.63% (150% higher than the industry average) and a trailing-12-month levered FCF margin of 35.05% (376.1% higher than the industry average).

Promising Analyst Estimates

Recently, analysts have predicted that CRM’s EPS and revenue for the quarter ending July 31, 2023, will increase by 58.8% and 10.4% year-over-year to $1.89 and $8.53 billion, respectively. Consensus predictions for CRM’s fiscal year 2024 revenue estimate of $34.65 billion and its EPS of $7.42 represent a 10.5% increase and 41.6% improvement year-over-year, respectively. Its EPS and revenue estimates for fiscal 2025, however, are expected to increase 21% and 10.9% year-over-year to $8.97 and $38.41 billion, respectively.

POWR Ratings and Bottom Line

CRM has received an overall A rating, equating to a Strong Buy, in the proprietary POWR Ratings system. In addition to a strong grade for Growth, CRM also has strong analyst estimates that align with its B grade for Sentiment. It also has a B grade for Quality, given its profitability. Out of 134 stocks in the Software – Application industry, CRM is ranked #9. Given these figures and to the company’s robust financials, historical growth, analyst estimates, profitability, and generative AI ecosystem, it could be worth investing in.

CRM shares were trading at $212.52 per share on Tuesday afternoon, up $2.66 (+1.27%). Year-to-date, CRM has gained 60.28%, versus a 12.05% rise in the benchmark S&P 500 index during the same period.

About the Author: Malaika Alphonsus

As an investment researcher with a degree in Economics and Psychology, Malaika Alphonsus has a passion for writing and financial markets. Her background and experience provide investors with unbiased, well-informed investment advice.

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