NYSE:CRM is not too expensive for the growth it is showing.

Last update: Aug 5, 2024

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.

Understanding NYSE:CRM's Growth

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:CRM scores a 8 out of 10:

CRM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 50.34%, which is quite impressive.
The Earnings Per Share has been growing by 26.05% on average over the past years. This is a very strong growth
Looking at the last year, CRM shows a quite strong growth in Revenue. The Revenue has grown by 11.04% in the last year.
Measured over the past years, CRM shows a very strong growth in Revenue. The Revenue has been growing by 21.28% on average per year.
The Earnings Per Share is expected to grow by 14.63% on average over the next years. This is quite good.
The Revenue is expected to grow by 10.16% on average over the next years. This is quite good.

Assessing Valuation Metrics for NYSE:CRM

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:

Compared to the rest of the industry, the Price/Earnings ratio of CRM indicates a somewhat cheap valuation: CRM is cheaper than 74.20% of the companies listed in the same industry.
76.33% 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 81.63% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, CRM is valued cheaply inside the industry as 82.69% of the companies are valued more expensively.
The excellent profitability rating of CRM may justify a higher PE ratio.
A more expensive valuation may be justified as CRM's earnings are expected to grow with 15.44% in the coming years.

How We Gauge Health for NYSE:CRM

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

An Altman-Z score of 4.70 indicates that CRM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.70, CRM is in the better half of the industry, outperforming 67.49% of the companies in the same industry.
CRM has a debt to FCF ratio of 0.83. This is a very positive value and a sign of high solvency as it would only need 0.83 years to pay back of all of its debts.
The Debt to FCF ratio of CRM (0.83) is better than 76.68% of its industry peers.
A Debt/Equity ratio of 0.14 indicates that CRM is not too dependend on debt financing.
The current and quick ratio evaluation for CRM is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Evaluating Profitability: NYSE:CRM

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:CRM, the assigned 8 is noteworthy for profitability:

With an excellent Return On Assets value of 5.69%, CRM belongs to the best of the industry, outperforming 80.92% of the companies in the same industry.
The Return On Equity of CRM (9.17%) is better than 80.21% of its industry peers.
The Return On Invested Capital of CRM (7.13%) is better than 83.75% of its industry peers.
The last Return On Invested Capital (7.13%) for CRM is above the 3 year average (3.04%), which is a sign of increasing profitability.
CRM's Profit Margin of 15.30% is amongst the best of the industry. CRM outperforms 84.45% of its industry peers.
CRM's Profit Margin has improved in the last couple of years.
CRM has a Operating Margin of 18.45%. This is amongst the best in the industry. CRM outperforms 89.05% of its industry peers.
In the last couple of years the Operating Margin of CRM has grown nicely.
With a decent Gross Margin value of 76.00%, CRM is doing good in the industry, outperforming 71.02% of the companies in the same industry.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.