Salesforce.com (CRM) Stock Climbs in After-Hours Trading on Strong Earnings Expectations

Salesforce.com (CRM) shares are rising in Tuesday's after hours trading session as the cloud computing company is expected to post a year-over-year growth in earnings.
By U-Jin Lee ,

NEW YORK (TheStreet) -- Salesforce.com (CRM) - Get Report  shares are rising 0.04% to $77.27 in Tuesday's after hours trading session as the cloud computing company is expected to post a year-over-year growth in earnings. 

Its latest financial data is due out on Wednesday after the market close. 

Analysts are estimating the company to earn 19 cents a share on revenue of $1.7 billion for the third quarter of fiscal 2016. 

During the same period the year before, the company earned 14 cents a share on revenue of $1.38 billion.

Drivers for the latest earnings include diverse cloud offerings and considerable spending on digital marketing, according to Zacks Equity Research. 

Separately, TheStreet Ratings team rates SALESFORCE.COM INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate SALESFORCE.COM INC (CRM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 24.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 98.6% when compared to the same quarter one year prior, rising from -$61.09 million to -$0.85 million.
  • Net operating cash flow has increased to $304.41 million or 23.79% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.48%.
  • SALESFORCE.COM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SALESFORCE.COM INC reported poor results of -$0.42 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus -$0.42).
  • You can view the full analysis from the report here: CRM
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