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Company Overview: Salesforce.com, Inc. (NYSE: CRM) is a global leader in customer relationship management (CRM) technology, connecting businesses and their customers. Its Customer 360 platform provides a single source of truth by linking customer data across systems, apps, and devices, enabling companies to sell, service, and perform commerce anywhere. It also provides Service Cloud for customer support, Marketing Cloud for digital marketing campaigns, Commerce Cloud as an e-commerce engine, and other products such as MuleSoft for data integration.
CRM Details
Key Takeaways from Q3FY22 (ended October 31, 2021)
Revenues & Gross Profit Key Highlights; Analysis by Kalkine Group
Recent Developments
Segment Wise Results Q3FY22
Balance Sheet & Liquidity Position
Key Metrics: CRM's EBITDA and net margins in FY21 were 16.1% and 19.3%, up from 15.2% and 0.8% in FY20, respectively. Its Debt/Equity ratio has been improved to 0.07x in FY21, from 0.09x in FY20.
Profitability Profile; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 35.54% of the total shareholding, while the top 4 constitute the maximum holding. The Vanguard Group, Inc. and Fidelity Management & Research Company LLC, hold the maximum stake in the company at 7.52% and 6.96%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Risk Analysis
Outlook
Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock has fallen 22.00% in the past three months. The stock is currently leaning towards the lower band of its 52-week range of USD 201.51 to USD 311.75. We have valued the stock using the Price/Earnings-based illustrative relative valuation method and arrived at a target price with an upside of low twenties (in percentage terms). We believe that the company can trade at a premium compared to its peer's average, considering its market dominance in the application software space, robust profitability margins, and global market presence. We have taken peers like Adobe, Inc. (NASDAQ: ADBE), SAP SE (NYSE: SAP), and others. Considering the robust top-line performance, proven track record, strong profitability margins, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the closing price of USD 226.27, up ~0.09%, as of January 19, 2022.
CRM Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.
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