In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Salesforce CRM against its key competitors in the Software industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Salesforce Background
Salesforce Inc provides enterprise cloud computing solutions. The company offers customer relationship management technology that brings companies and customers together. Its Customer 360 platform helps the group to deliver a single source of truth, connecting customer data across systems, apps, and devices to help companies sell, service, market, and conduct commerce. It also offers Service Cloud for customer support, Marketing Cloud for digital marketing campaigns, Commerce Cloud as an e-commerce engine, the Salesforce Platform, which allows enterprises to build applications, and other solutions, such as MuleSoft for data integration.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Salesforce Inc | 108.68 | 4.76 | 8.29 | 2.11% | $2.42 | $6.57 | 11.27% |
| Adobe Inc | 51.37 | 16.61 | 14.36 | 9.18% | $2.06 | $4.41 | 11.56% |
| SAP SE | 54.59 | 4.52 | 6.30 | 2.75% | $2.23 | $6.2 | 9.34% |
| Intuit Inc | 69.58 | 10.47 | 12.18 | 1.41% | $0.53 | $2.22 | 14.67% |
| Synopsys Inc | 68.53 | 13.47 | 14.42 | 5.77% | $0.48 | $1.27 | 24.51% |
| Cadence Design Systems Inc | 83.38 | 25.57 | 20.37 | 8.45% | $0.35 | $0.91 | 13.36% |
| Workday Inc | 1202.62 | 11.46 | 10.85 | 1.76% | $0.23 | $1.42 | 16.67% |
| Roper Technologies Inc | 42.82 | 3.34 | 9.48 | 2.26% | $0.72 | $1.13 | 3.2% |
| Autodesk Inc | 59.90 | 36.66 | 10.29 | 17.93% | $0.37 | $1.29 | 10.47% |
| Palantir Technologies Inc | 243 | 13.69 | 22.59 | 2.8% | $0.11 | $0.5 | 8.99% |
| Ansys Inc | 60.90 | 5.85 | 13.63 | 1.12% | $0.11 | $0.39 | -2.9% |
| Splunk Inc | 222.46 | 130.08 | 6.40 | 121.15% | $0.14 | $0.86 | 14.8% |
| PTC Inc | 89.45 | 7.54 | 9.72 | 2.42% | $0.16 | $0.44 | 18.09% |
| Zoom Video Communications Inc | 83.66 | 2.61 | 4.32 | 1.96% | $0.2 | $0.87 | 3.16% |
| Tyler Technologies Inc | 116.36 | 6.36 | 9.54 | 1.67% | $0.11 | $0.23 | 4.54% |
| Dynatrace Inc | 102.72 | 9.74 | 13.56 | 2.04% | $0.05 | $0.29 | 25.91% |
| AppLovin Corp | 164.46 | 14.11 | 5.60 | 8.25% | $0.31 | $0.6 | 21.2% |
| Manhattan Associates Inc | 87.73 | 54.73 | 16.68 | 19.96% | $0.06 | $0.13 | -0.08% |
| Bentley Systems Inc | 92.62 | 21.80 | 14.03 | 7.94% | $0.1 | $0.24 | 14.27% |
| NICE Ltd | 43.60 | 4.23 | 6.15 | 2.89% | $0.16 | $0.41 | 8.4% |
| Average | 154.72 | 20.68 | 11.6 | 11.67% | $0.45 | $1.25 | 11.59% |
Upon closer analysis of Salesforce, the following trends become apparent:
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The Price to Earnings ratio of 108.68 is 0.7x lower than the industry average, indicating potential undervaluation for the stock.
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Considering a Price to Book ratio of 4.76, which is well below the industry average by 0.23x, the stock may be undervalued based on its book value compared to its peers.
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Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 8.29, which is 0.71x the industry average.
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With a Return on Equity (ROE) of 2.11% that is 9.56% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.42 Billion is 5.38x above the industry average, highlighting stronger profitability and robust cash flow generation.
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The company has higher gross profit of $6.57 Billion, which indicates 5.26x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company is witnessing a substantial decline in revenue growth, with a rate of 11.27% compared to the industry average of 11.59%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, Salesforce stands in comparison with its top 4 peers, leading to the following comparisons:
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Salesforce has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.22.
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This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
Key Takeaways
Salesforce has a low PE ratio, indicating that its stock price is relatively low compared to its earnings. The low PB ratio suggests that the stock is undervalued based on its book value. The low PS ratio indicates that the stock is trading at a lower price relative to its sales. On the other hand, Salesforce has a high EBITDA and gross profit, indicating strong profitability. However, its low ROE and revenue growth suggest that the company may be facing challenges in generating returns and expanding its business.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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