Salesforce.com Inc (NYSE:CRM) is a $64 billion company today. Investors that bought shares one year ago are sitting on a 17.33% total return. That's below the S&P 500's return of 18.3%.
Salesforce stock is underperforming the market. It's beaten down, but it reports earnings on Thursday. So is it a good time to buy? To answer this question we've turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics...
Earnings-per-Share (EPS) Growth: Salesforce reported a recent EPS growth rate of -75%. That's below the software industry average of 12.28%. That's not a good sign. We like to see companies that have higher earnings growth.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the software industry is 69.82. And Salesforce's ratio comes in at 342.46. Its valuation looks expensive compared to many of its competitors.
Debt-to-Equity : The debt-to-equity ratio for Salesforce stock is 26.78. That's below the software industry average of 59.65. The company is less leveraged.
Free Cash Flow per Share Growth : Salesforce's FCF has been higher than its competitors over the last year. That's good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.
Profit Margins : The profit margin of Salesforce comes in at -2.24% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Salesforce's profit margin is above the software average of -22.86%. So that's a positive indicator for investors.
Return on Equity : Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Salesforce is 2.87%, and that's below its industry average ROE of 11.1%.
Salesforce stock passes three of our six key metrics today. That's why our Investment U Stock Grader rates it as a hold.