NYSE:CRM, a growth stock which is not overvalued.

Last update: Dec 25, 2023

Here's SALESFORCE INC (NYSE:CRM) for you, a growth stock our stock screener believes is undervalued. NYSE:CRM is scoring impressively in terms of growth while demonstrating strong financials. On top of that, it remains attractively priced. Let's break it down further.

Growth Assessment of NYSE:CRM

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:CRM boasts a 8 out of 10:

CRM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 72.34%, which is quite impressive.
Measured over the past years, CRM shows a very strong growth in Earnings Per Share. The EPS has been growing by 31.21% on average per year.
The Revenue has grown by 12.08% in the past year. This is quite good.
CRM shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 24.36% yearly.
Based on estimates for the next years, CRM will show a very strong growth in Earnings Per Share. The EPS will grow by 21.32% on average per year.
CRM is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.83% yearly.

ChartMill's Evaluation of Valuation

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:CRM scores a 6 out of 10:

Based on the Price/Earnings ratio, CRM is valued a bit cheaper than the industry average as 75.36% of the companies are valued more expensively.
77.14% of the companies in the same industry are more expensive than CRM, based on the Price/Forward Earnings ratio.
Based on the Enterprise Value to EBITDA ratio, CRM is valued cheaply inside the industry as 81.79% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, CRM is valued cheaply inside the industry as 80.71% of the companies are valued more expensively.
CRM's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
CRM has a very decent profitability rating, which may justify a higher PE ratio.
CRM's earnings are expected to grow with 29.33% in the coming years. This may justify a more expensive valuation.

Health Assessment of NYSE:CRM

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:CRM, the assigned 5 for health provides valuable insights:

An Altman-Z score of 5.48 indicates that CRM is not in any danger for bankruptcy at the moment.
CRM has a better Altman-Z score (5.48) than 71.07% of its industry peers.
The Debt to FCF ratio of CRM is 1.07, which is an excellent value as it means it would take CRM, only 1.07 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.07, CRM is in the better half of the industry, outperforming 80.00% of the companies in the same industry.
CRM has a Debt/Equity ratio of 0.15. This is a healthy value indicating a solid balance between debt and equity.

Looking at the Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:CRM was assigned a score of 7 for profitability:

CRM has a Return On Assets of 2.85%. This is in the better half of the industry: CRM outperforms 78.57% of its industry peers.
The Return On Equity of CRM (4.46%) is better than 77.50% of its industry peers.
The Return On Invested Capital of CRM (4.73%) is better than 80.00% of its industry peers.
The 3 year average ROIC (0.90%) for CRM is below the current ROIC(4.73%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 7.63%, CRM belongs to the best of the industry, outperforming 83.21% of the companies in the same industry.
Looking at the Operating Margin, with a value of 15.87%, CRM belongs to the top of the industry, outperforming 88.57% of the companies in the same industry.
In the last couple of years the Operating Margin of CRM has grown nicely.
The Gross Margin of CRM (74.99%) is better than 69.64% of its industry peers.

More Affordable Growth stocks can be found in our Affordable Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of CRM

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.