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TheStreet Open House

Salesforce.com Inc
CRM : NYSE : Technology
$57.57 | %
Today's Range: 0.00 - 0.00
Avg. Daily Volume: 4,929,700
09/15/14 - 4:00 PM ET

Financial Analysis


SALESFORCE.COM INC's gross profit margin for the second quarter of its fiscal year 2014 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line. SALESFORCE.COM INC has very weak liquidity. Currently, the Quick Ratio is 0.49 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has increased by 15.65% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q2 FY14 Q2 FY13
Net Sales ($mil)1318.55957.09
EBITDA ($mil)71.4935.97
EBIT ($mil)-33.43-39.86
Net Income ($mil)-61.0976.6


Balance Sheet Q2 FY14 Q2 FY13
Cash & Equiv. ($mil)844.58623.49
Total Assets ($mil)9009.837969.9
Total Debt ($mil)1667.061869.66
Equity ($mil)3306.752859.15


Profitability Q2 FY14 Q2 FY13
Gross Profit Margin83.584.71
EBITDA Margin5.423.75
Operating Margin-2.54-4.16
Sales Turnover0.530.44
Return on Assets-4.42-2.91
Return on Equity-12.06-8.12
Debt Q2 FY14 Q2 FY13
Current Ratio0.660.55
Debt/Capital0.340.4
Interest Expense18.3119.66
Interest Coverage-1.83-2.03


Share Data Q2 FY14 Q2 FY13
Shares outstanding (mil)619.0596.0
Div / share0.00.0
EPS-0.10.12
Book value / share5.344.8
Institutional Own % n/a n/a
Avg Daily Volume4916743.06552605.0

Valuation


HOLD. The current P/E ratio is negative, which has no meaningful value in the assessment of premium or discount valuation, it simply displays that the company has negative earnings. For additional comparison, its price-to-book ratio of 11.09 indicates a significant premium versus the S&P 500 average of 2.72 and a significant premium versus the industry average of 8.45. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, SALESFORCE.COM INC seems to be trading at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
CRM NM Peers 42.83   CRM 32.67 Peers 25.24

Neutral. The absence of a valid P/E ratio happens when a stock can not be valued on the basis of a negative stream of earnings.

CRM's P/E is negative making this valuation measure meaningless.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

CRM is trading at a significant premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
CRM 83.45 Peers 48.11   CRM NA Peers 2.72

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

CRM is trading at a significant premium to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

Ratio not available.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
CRM 11.09 Peers 8.45   CRM -56.21 Peers 55.61

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

CRM is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, CRM is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
CRM 7.69 Peers 5.69   CRM 37.25 Peers 12.42

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

CRM is trading at a significant premium to its industry.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

CRM has a sales growth rate that significantly exceeds its peers.

 

 

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