Salesforce.com (CRM) is scheduled to release its 1st quarter FY14 earnings on Thursday, May 23rd. Below I have highlighted this quarter's earnings estimates as well as provided a fundamental look at the company's financial position and current valuation.
Profile and Estimates
Salesforce.com has a market cap of $27.33 billion and currently trades for $46.33 per share. Shares are up 10.23% YTD and trade 54.21% above their 52-week low of $30.04. Analysts have a mean target price of $49.11 and a median price target of $51.00 on the shares. Forty analysts have an average first quarter earnings per share estimate of $0.10 (Non-GAAP) on estimated revenues of $887.08 million, 27% higher than revenues in the first quarter of FY13.
Financial Position and Valuation
Salesforce.com has been extremely effective at building the company's revenues from its cloud based CRM software. Revenues have grown 32.7% on average over the last three years, much higher than the industry's respective 6.4%. However, this growth, the company's low D/E of 0.1 and its large cash position ($868 million) are the only few things I see that the company's financials have going for them.
Book value improved via acquisitions last year but intangibles grew much faster (up 77% last year to $1.8 billion). This, coupled with the tangible book value falling 15.6% to $518 million, and on top of a 4.4% share count increase (due to stock based compensation) paints a much uglier picture for shareholders (and I didn't even mention last year's $270 million loss).
Shares for Salesforce.com have performed extremely well over the past year but it would appear management, and not the shareholders, have been the real winners. Analysts on consensus are still expecting the shares to move higher and it would appear the possibility of this short term is high as Mr. Market seems to have turned a blind eye to the company's fundamentals. Be careful and stay tuned for earnings on Thursday.
In addition to the links above, ratios and financial data was sourced from Morningstar.com, which you can find here.