Salesforce Teaming With Google Will Help Companies

Stock (Symbol)

Salesforce.com (CRM)

Stock Price

$99

Sector

Technology

Data is as of

October 22, 2017

Expected to Report

Nov 15

Company Description

Salesforce.com, inc. is a provider of enterprise cloud computing solutions that include apps and platform services, as well as professional services. The Company focuses on customer relationship management (CRM). The Company offers six core cloud services that include sales force automation, customer service and support, marketing automation, community management, analytics and a cloud platform for building custom applications. Source: Thomson Financial

Sharek’s Take

Salesforce.com (CRM) announced an enhanced relationship with Google to make it easier (and smarter) for companies to do their work. Salesforce delivers sales and marketing solutions to its customers. Google is the king of online advertising. This new arrangement allows companies to connect sales, marketing and advertising data across Salesforce and Google Analytics, for smarter ad targeting. Salesforce is the world’s leader in customer relationship management (CRM) software and connects more than 150,000 clients to their customers via the internet and stores this customer information in the cloud. Salesforce software is state of the art and in my opinion head-and-shoulders above its competitors because its user friendly. Not only does Salesforce tackle things like having your clients in a program that has details of when you spoke last and when you need to call them next, it goes way beyond that to address issues like working with a team on projects, or in my instance how much money a client has under management with you and how has the ballance grown (or declined) over time. And all the data is stored at Salesforce (the cloud)…or maybe Google. CRM is a top growth stock but always carries a high valuation — because it’s the best. Salesforce sells for 75x earnings, and grows profits around 30% a year. That’s expensive, but if you don’t pony up for the higher price you could be left sitting on the sidelines. Still, my 2018 Fair Value is $136 a share, which gives huge upside to the stock even at this level.

One Year Chart

Last qtr Salesforce grew sales 26% and had bookings growth (future orders) of 26%. Profits surged 38% but what impresses me is before last qtr the most CRM ever made was $0.28. Last qtr it made $0.33. And qtrly Estimates are for profits of $0.37, $0.34, $0.38 and $0.43 the next 4 qtrs. That’s qtrly growth of 54%, 21%, 36% and 30%. Note 2QtrsOut profits are expected to be a bit light ($0.34) and that’s also the worst estimate of the four (21%). So if CRM comes through with say a $0.37 profit that would mean +30% for perhaps five straight qtrs. Nice! The Est. LTG just increased from 28% a year to 29%.

Fair Value

Believe it or not the 75 P/E this stock has is lower than I feel it should be. My Fair Value is an 80 P/E. That gives this stock HUGE upside into next year, but right now its close to its Fair Value.

Bottom Line

Salesforce’s ten-year chart is a thing of beauty. And this enhanced relationship with Google will me very beneficial to businesses. In fact, profit growth could reach 40% or more next year. This is clearly one of the top growth stocks to own, and any dip should be seen as a buying opportunity. CRM ranks 6th in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings.