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 | 71.13 | 4.85 | 8.43 | 2.46% | $2.75 | $7.14 | 6.5% |
| Adobe Inc | 46.09 | 14.93 | 12.88 | 9.18% | $2.06 | $4.41 | 11.56% |
| SAP SE | 56.07 | 4.67 | 6.53 | 3.05% | $2.52 | $6.2 | 5.02% |
| Intuit Inc | 65.37 | 10.60 | 12.02 | 2.08% | $0.6 | $2.53 | 11.34% |
| Cadence Design Systems Inc | 80.56 | 24.61 | 20.52 | 9.94% | $0.41 | $0.96 | 18.75% |
| Workday Inc | 51.20 | 8.68 | 9.75 | 16.16% | $0.15 | $1.46 | 3.02% |
| Roper Technologies Inc | 42.15 | 3.29 | 9.33 | 2.26% | $0.72 | $1.13 | 12.76% |
| Autodesk Inc | 59.02 | 28.52 | 9.72 | 16.9% | $0.35 | $1.34 | 3.89% |
| Palantir Technologies Inc | 264.56 | 15.16 | 24.59 | 2.8% | $0.11 | $0.5 | 19.61% |
| Datadog Inc | 882.36 | 20.24 | 20.33 | 2.82% | $0.07 | $0.48 | 25.62% |
| Ansys Inc | 57.38 | 5.31 | 12.66 | 5.29% | $0.37 | $0.74 | 15.99% |
| Splunk Inc | 102.92 | 35.60 | 6.51 | 90.8% | $0.47 | $1.26 | 39.24% |
| PTC Inc | 90.50 | 7.63 | 9.83 | 2.42% | $0.16 | $0.44 | 18.09% |
| AppLovin Corp | 62.20 | 16.59 | 6.73 | 14.58% | $0.37 | $0.68 | 35.73% |
| Zoom Video Communications Inc | 32.12 | 2.55 | 4.53 | 3.87% | $0.2 | $0.87 | 2.56% |
| MicroStrategy Inc | 39.78 | 8.24 | 35.08 | 5.93% | $-0.04 | $0.1 | -6.09% |
| Tyler Technologies Inc | 107.52 | 6 | 9.14 | 1.34% | $0.09 | $0.21 | 6.35% |
| Manhattan Associates Inc | 89.48 | 55.83 | 17.01 | 19.96% | $0.06 | $0.13 | 20.27% |
| NICE Ltd | 46.77 | 4.53 | 6.66 | 2.49% | $0.16 | $0.42 | 3.63% |
| Bentley Systems Inc | 48.09 | 16.19 | 13.02 | 22.81% | $0.05 | $0.24 | 8.26% |
| Average | 117.06 | 15.22 | 12.99 | 12.35% | $0.47 | $1.27 | 13.45% |
Through a detailed examination of Salesforce, we can deduce the following trends:
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The stock's Price to Earnings ratio of 71.13 is lower than the industry average by 0.61x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 4.85, significantly falling below the industry average by 0.32x, it suggests undervaluation and the possibility of untapped growth prospects.
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With a relatively low Price to Sales ratio of 8.43, which is 0.65x the industry average, the stock might be considered undervalued based on sales performance.
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The company has a lower Return on Equity (ROE) of 2.46%, which is 9.89% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.75 Billion, which is 5.85x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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With higher gross profit of $7.14 Billion, which indicates 5.62x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 6.5% is significantly lower compared to the industry average of 13.45%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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.
When assessing Salesforce against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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Among its top 4 peers, Salesforce has a stronger financial position with a lower debt-to-equity ratio of 0.21.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
In comparison to its peers in the Software industry, Salesforce exhibits low PE, PB, and PS ratios, indicating potential undervaluation. However, the company's low ROE suggests lower profitability compared to industry peers. On the positive side, Salesforce demonstrates high EBITDA and gross profit figures, reflecting strong operational performance. Additionally, the company's low revenue growth may raise concerns about its ability to expand in a competitive market.
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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