Salesforce FQ1 '24 Earnings Preview: Consensus Up, But Beat Still Likely

Summary

• Estimates for Salesforce earnings have been revised upwards significantly (22.9%) in response to its most recent quarter but are still not too aggressive in terms of their assumptions.
• Calculating through the numbers, we see that they imply margins that are significantly higher YoY, but only about half of what we saw in the last quarter.
• The question here becomes a matter of what portion of Salesforce margins are going to be durable QoQ versus how much they will revert to YoY norms.
• Given the company's aggressive push towards profitability, I think we will see more margins preserved QoQ than may be expected, which should amount to a beat against consensus EPS estimates.
• CRM stock has also had excellent momentum this year and should continue appreciating as it grows earnings, making Salesforce a buy for the near term.

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Overview

Salesforce (NYSE:CRM) has continued its run of growth and increasing profitability throughout this year, with a particularly strong 23.4% beat against consensus EPS for its Q4 2023. On the latest conference call management

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CRM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.