NEW YORK (TheStreet) -- Salesforce.com (CRM) shares are up 4.1% to $59.34 in trading on Thursday after the enterprise cloud computing solutions provider's rival, Oracle (ORCL) , experienced sharp gains after reporting better than expected second quarter earnings after yesterday's the closing bell.
Oracle shares are up 10% today after the company reported second quarter income of 69 cents per diluted share that beat analysts' expectations by one cent. The earnings beat was a result, in part, of the company's continuing shift into cloud computing services.
Oracle was ranked second in market share last year among software manufacturer's, trailing only Microsoft (MSFT) . Salesforce.com is the world's leading customer relationship management software provider and yesterday the company announced the launch of a new centralized, universal file-sharing solution product called Salesforce Files Connect.
TheStreet Ratings team rates SALESFORCE.COM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SALESFORCE.COM INC (CRM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CRM's revenue growth has slightly outpaced the industry average of 27.3%. Since the same quarter one year prior, revenues rose by 28.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SALESFORCE.COM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SALESFORCE.COM INC continued to lose money by earning -$0.40 versus -$0.48 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus -$0.40).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, SALESFORCE.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $122.51 million or 11.13% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: CRM Ratings Report