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salesforce (CRM) to Post Q1 Earnings: What's in the Cards?

salesforce.com CRM is slated to release first-quarter fiscal 2021 results on May 28.

For the quarter, the company projects total revenues between $4.875 billion and $4.885 billion. Moreover, non-GAAP earnings are expected between 70 cents and 71 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $4.85 billion, indicating an increase of 29.9% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings has remained stable at 69 cents per share over the past 30 days. However, the bottom line is expected to decline 25.8% from the year-ago quarter’s reported figure.

Notably, salesforce’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 31.6%.

Let’s see how things have shaped up for this announcement.

Factors at Play

salesforce’s first-quarter fiscal 2021 earnings are likely to have been adversely impacted by a decline in software spending due to the coronavirus outbreak. The company’s exposure to small and medium businesses (SMBs), hard-hit by the coronavirus impact on the economy, is likely to have hurt its top line.

Moreover, stiff competition from Oracle and Microsoft remains a concern in addition to forex headwinds. Increasing investment in international expansions and data centers might have been an overhang on the to-be-reported quarter’s profitability.

Nevertheless, the ongoing digital transformation has been benefiting salesforce’s top line, a trend that most likely continued in the to-be-reported quarter too. The company is also likely to have gained traction from its firm focus on building and extending relationships with leading brands across industries and geographies.

Growth across all its four major cloud service offerings, namely Sales Cloud, Service Cloud, Platform and Marketing & Commerce Cloud is likely to have boosted the company’s subscription as well as supported its revenue stream, which is a key catalyst.

Additionally, strategic acquisitions of mainly Tableau and Salesforce.org are expected to have aided the company’s top-line growth.

What Our Model Indicates

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

salesforce has an Earnings ESP of +1.14% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some other companies worth considering from the same sector as our model shows that these too have the right combination of elements to beat on earnings this reporting cycle:

Nutanix NTNX has an Earnings ESP of +1.68% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Big Lots BIG has an Earnings ESP of +19.01% and a Zacks Rank #2.

Momo MOMO has an Earnings ESP of +5.75% and is Zacks #3 Ranked. 


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Big Lots, Inc. (BIG): Free Stock Analysis Report
 
salesforce.com, inc. (CRM): Free Stock Analysis Report
 
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Momo Inc. (MOMO): Free Stock Analysis Report
 
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