On Thursday, Salesforce.com Inc. (NYSE:CRM) shares edged higher 2.5% after announcing its most recent quarterly results. The company reported its fiscal Q2 revenue and earnings Wednesday after markets closed, beating analyst expectations.
Salesforce posted non-GAAP Q2 earnings per share of $1.48 beating the consensus Street estimate of $0.92. On the other hand, its GAAP EPS of $0.56 outperformed the expectations of $0.02, while revenue for the quarter grew by 24.3% to $6.34 billion, $90 million better than estimates.
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The company also issued a better-than-expected Q3 revenue and earnings guidance of $6.78-$6.79 billion and $0.91-$0.92, respectively. In comparison, analysts have a consensus Q3 revenue forecast of $6.66 billion and $0.82 earnings per share.
Salesforce raised its full-year 2021 revenue guidance to $26.2-$26.3 billion, up from $25.9-$26.0 billion, also slightly better than the Street estimate of $26 billion. In addition, the company now expects fiscal 2021 earnings per share in the range of $4.36-$4.38, up from the previous forecast of $3.79-$3.81, also better than the analyst expectations of $3.85.
From a valuation perspective, Salesforce shares trade at a P/E ratio of 54.29. Moreover, analysts expect CRM earnings per share to fall by more than 22% this year before rising at an average rate of about 10% over the next five years.
Therefore, growth investors could also opt for alternatives given Salesforce’s current growth prospects. However, with the company’s recent purchase of Slack Technologies providing a significant growth catalyst, it could outperform analysts’ expectations on earnings in the coming quarters.
Therefore, CRM shares could continue to soar amid renewed optimism after its upbeat Q3 and full-year 2021 guidance.
Technically, Salesforce shares seem to have recently rallied to trade in overbought conditions of the 14-day RSI. As a result, the stock also spiked to break out of the ascending channel formation in the intraday chart.
However, it is still far off its current 12-month highs of about $284.50, meaning the current upward movement could continue. Therefore, investors can target profits at $275.64 or higher at $284.02, while $259.62 and $251.15 provide crucial support.
In summary, although CRM shares are up more than 27% since mid-May, the stock is yet to retest the current 52-week high. Furthermore, Salesforce has only started integrating Slack technologies into its business model, creating significant synergies.
Therefore, investors could be looking at the company’s exciting revenue and earnings guidance and Slack as significant catalysts for growth. As such, it may not be too late to buy.
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