Should You Be Loading Up on Salesforce Stock?

CRM’s valuation has fallen from the clouds but remains fairly high

Jul 15, 2022 at 10:25 AM
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Salesforce Inc (NYSE:CRM) is an American cloud-based software company that provides customer relationship management software and applications focused on sales, customer service, marketing automation, analytics, and application development.

Drilling down, Salesforce stock price has decreased roughly 32% over the past 12 months, and has taken a 36% haircut in 2022. The equity has been trading dangerously close to its May 24, two-year low of $154.55, and was last seen up 1.1% at $162.82, likely getting a boost on the Dow's morning rebound. The security is still staring up at all short- and long-term trendlines, including its 80-day moving average, which has rejected several rallies since the beginning of this year. 

crm july 15

Analysts remain incredibly bullish over the stock. Of the 26 in coverage, all but three call it a "buy" or better. Plus, the 12-month consensus price target of $246.29 is a 50.4% premium to current levels. 

However, Salesforce stock still remains overvalued by most valuation metrics. CRM trades at a forward price-earnings ratio of 36.90 and a price-sales ratio of 6.21, which are both rich values despite the stock’s bearish form over the past year. The software business is also expected to see a minimal decrease of 0.4% in earnings for fiscal 2022.

Estimates predict that Salesforce will maintain strong top line growth over the next two years. CRM is expected to report 20% revenue growth for fiscal 2023 and 17.7% revenue growth for fiscal 2024. In addition, the software company is estimated to increase earnings 22.7% for fiscal 2023 as well, making Salesforce stock a viable option for growth investors despite its high price.

 

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