Should you buy Salesforce now or wait?

Salesforce (CRM) reported mixed financial results for its third quarter of 2022. The company's management is confident of generating large profit margins soon. However, the company laid off some of its employees in November. Moreover, the stock has lost more than 35% this year. Let's find out if investors should buy CRM now or wait….

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Software company Salesforce, Inc. (CRM) reported solid year-over-year revenue growth during of his last trimester. Additionally, the company recently signed a deal with insurtech leader Zywave.

The partnership aims to merge insurance agency sales and customer service for efficient and strategic workflows enhanced by data and content to deliver a hassle-free customer experience.

Amy Weaver, President and Chief Financial Officer of CRM, said, "During these uncertain economic times, we remain committed to delivering profitable growth and steadily increasing operating margin."

However, the company's bottom line declined year-over-year in its third quarter 2022. Additionally, CRM laid off some of its employees in November, citing deteriorating demand .

CRM has lost slightly over the past month to close the last trading session at $160.25. It has lost 36.9% since the start of the year and 43.8% over the past year.

Here's what could shape CRM performance in the short term:

Mixed finance

Total CRM revenue was $7.84 billion for the third quarter ended October 31, 2022, up 14.2% year-over-year. Its gross profit was $5.75 billion, up 14.5% year-on-year. However, its net income was $210 million, down 55.1% year-on-year, while its EPS was $0.21, down 55. 3% year over year.

Mixed EPS estimates

For the quarter ended October 2022, CRM EPS is expected to decline 4.7% year-over-year to $1.21 and slightly year-over-year to $4.73 in 2023.

On the other hand, its EPS is expected to increase 59.5% YoY to $1.34 for the quarter ending January 2023 and 18.6% YoY to $5.61 in 2024.

Low profitability

CRM's trailing 12-month EBITDA margin of 8.41% is 29% below the industry average of 11.84%, and its trailing 12-month net profit margin of 1.83% is 41.9% lower than the industry average of 3.15%. .

In addition, its ROCE, ROTC and ROTA over the last 12 months are 0.93%, 0.11% and 0.57%, compared to industry averages of 4.75%, 3.24% and 1.52%, respectively.

POWR ratings reflect uncertain outlook

CRM has an overall rating of C, which equates to neutral in our proprietary POWR rating system. POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary scoring system also rates each stock against eight distinct categories. CRM has a C rating for growth, which matches the mixed financial data from the last quarter released. It has a C rating for stability, in sync with its 1.12 beta.

In the software and apps industry, which has 139 stocks, CRM is ranked #38. The industry is rated F.

Click here for additional POWR ratings for CRM (Value, Momentum, Sentiment, Quality).

Check here all the most important stocks in the software and applications sector.

Conclusion

CRM beat consensus estimates in its latest quarter. It slightly exceeded revenue estimates and EPS estimates by 14.5%. However, the stock has lost 40.8% since hitting its 52-week high of $270.57 on December 10, 2021. Also, given its poor profitability, investors might expect a better point. entry in the title.

How does Salesforce, Inc. (CRM) compare to its peers?

Although CRM has an overall POWR rating of C, one might consider looking at industry peers Commvault Systems, Inc. (CVLT), IBEX Limited (IBEX), and eGain Corporation (EGAN), which have a overall rating A (Strong Buy).

Shares of CRM were trading at $145.20 per share on Thursday afternoon, down $15.05 (-9.39%). Year...