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Salesforce (CRM) Set to Report Q3 Earnings: What's in Store?

By Zacks Investment ResearchStock MarketsNov 25, 2021 07:18AM ET
www.investing.com/analysis/salesforce-crm-set-to-report-q3-earnings-whats-in-store-200609541
Salesforce (CRM) Set to Report Q3 Earnings: What's in Store?
By Zacks Investment Research   |  Nov 25, 2021 07:18AM ET
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Salesforce (NYSE:CRM) CRM is scheduled to release third-quarter fiscal 2022 results on Nov 30.

For the fiscal third quarter, the company projects total revenues between $6.78 billion and $6.79 billion. Also, non-GAAP earnings are expected between 91 cents and 92 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $6.79 billion, indicating an increase of 25.3% from the year-ago quarter’s reported figure.

The consensus mark for earnings has remained unrevised at 92 cents per share for the past 60 days. The bottom line is expected to decrease 47.1% year over year.

Salesforce’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 68.5%.

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

Factors to Consider

Salesforce’s third-quarter performance is likely to have benefited from the robust demand environment as customers have been undergoing a major digital transformation. The customer relationship management software provider’s focus on introducing more aligned products per customer needs is expected to have boosted its top line in the quarter under review.

Salesforce’s ability to offer integrated solutions for customers’ business problems is likely to have been a key growth driver. The firm’s products like Trailhead and myTrailhead are helping companies through their transformation processes along with an increasing business scale with modern technology.

Growth across its four major cloud service offerings, Sales Cloud, Service Cloud, Platform and other plus Marketing & Commerce Cloud, is anticipated to have boosted Salesforce’s subscription and supported its revenue stream, a major catalyst.

The company’s quarterly performance is also likely to have gained from its firm focus on building and expanding relationships with the leading brands across industries and geographies. Also, significant growth opportunities in the public sector are expected to have been a tailwind during the quarter under review.

The acquisitions of the likes of Slack, Mobify and Vlocity are anticipated to have aided the company’s top-line growth during the to-be-reported quarter.

However, a decline in software spending by small & medium businesses amid the macroeconomic uncertainty due to the COVID-19 pandemic might have affected Salesforce’s fiscal third-quarter performance.

Further, stiff competition from Oracle (NYSE:ORCL) and Microsoft (NASDAQ:MSFT) is a concern along with the forex headwinds. Also, increasing investments in International expansions and data centers might have eroded the company’s profitability during the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Salesforce this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Though Salesforce currently carries a Zacks Rank #2, it has an Earnings ESP of -0.40%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combinations

Per our model, PVH Corporation PVH, AutoZone (NYSE:AZO) AZO and Lululemon Athletica (NASDAQ:LULU) LULU have the right combination of elements to post an earnings beat in their upcoming releases.

PVH Corporation is slated to report third-quarter fiscal 2022 results on Dec 1. Shares of PVH Corp (NYSE:PVH). sport a Zacks Rank #1 and have an Earnings ESP of +1.61% at present. PVH’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missed the same on one occasion, the average surprise being 177.5%.

The Zacks Consensus Estimate for quarterly earnings is pegged at $2.07 per share, suggesting a year-over-year improvement of 56.8%. PVH’s quarterly revenues are estimated to increase 13.4% year over year to $2.40 billion.

AutoZone carries a Zacks Rank #2 and has an Earnings ESP of +2.68%. The company is scheduled to report first-quarter fiscal 2022 results on Dec 7. AutoZone’s earnings have surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 18.6%.

The Zacks Consensus Estimate for AZO’s first-quarter earnings is pegged at $20.65 per share, representing a year-over-year decline of 11%. The consensus mark for revenues is pinned at $3.33 billion, reflecting a year-over-year decrease of 5.6%.

Lululemon currently carries a Zacks Rank #2 and has an Earnings ESP of +1.44%. Lululemon is expected to report its third-quarter fiscal 2022 results on Dec 9. LULU’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 25.2%.

The Zacks Consensus Estimate for Lululemon’s third-quarter earnings is pinned at $1.39 per share, reflecting year-over-year growth of 19.8%. LULU is estimated to report revenues of $1.43 billion, which suggests an increase of 28.1% from the year-ago quarter.


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Salesforce (CRM) Set to Report Q3 Earnings: What's in Store?
 

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Salesforce (CRM) Set to Report Q3 Earnings: What's in Store?

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