In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Salesforce CRM in relation to its major competitors in the Software industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.
Salesforce Background
Salesforce 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 | 43.22 | 4.11 | 6.67 | 2.44% | $2.79 | $7.17 | 8.39% |
| Adobe Inc | 51.40 | 17.06 | 12.76 | 10.38% | $2.19 | $4.71 | 10.24% |
| SAP SE | 90.75 | 5.49 | 7.08 | 2.1% | $1.94 | $6.02 | 9.72% |
| Intuit Inc | 59.91 | 9.48 | 10.90 | -0.11% | $0.13 | $2.4 | -52.74% |
| Synopsys Inc | 49.62 | 9.59 | 11.56 | 5.49% | $0.46 | $1.24 | 12.65% |
| Cadence Design Systems Inc | 66.40 | 16.47 | 16.81 | 5.86% | $0.38 | $0.92 | 8.61% |
| Workday Inc | 44.88 | 8.27 | 8.89 | 1.6% | $0.28 | $1.57 | 16.68% |
| Palantir Technologies Inc | 179.47 | 16.87 | 29.24 | 3.43% | $0.11 | $0.55 | 27.15% |
| Roper Technologies Inc | 41.28 | 3.26 | 9.05 | 1.88% | $0.69 | $1.19 | 12.12% |
| Autodesk Inc | 52.82 | 22.45 | 9.61 | 12.17% | $0.39 | $1.36 | 6.21% |
| Datadog Inc | 237.19 | 15.61 | 17.15 | 1.9% | $0.06 | $0.52 | 26.66% |
| AppLovin Corp | 37.67 | 36.16 | 7.80 | 39.35% | $0.51 | $0.8 | 43.98% |
| Ansys Inc | 54.63 | 4.84 | 11.65 | 2.37% | $0.2 | $0.52 | 19.64% |
| Tyler Technologies Inc | 119.82 | 7.88 | 12.28 | 2.2% | $0.12 | $0.24 | 7.28% |
| Zoom Video Communications Inc | 24.58 | 2.48 | 4.70 | 2.6% | $0.23 | $0.88 | 2.09% |
| PTC Inc | 70.87 | 6.92 | 9.43 | 2.32% | $0.13 | $0.41 | -4.37% |
| Manhattan Associates Inc | 78.24 | 65.32 | 16.08 | 21.98% | $0.07 | $0.15 | 14.85% |
| Dynatrace Inc | 95.60 | 7.16 | 9.98 | 1.89% | $0.06 | $0.32 | 19.93% |
| Bentley Systems Inc | 42.36 | 14.96 | 12.64 | 7.52% | $0.1 | $0.27 | 11.32% |
| Average | 77.64 | 15.01 | 12.09 | 6.94% | $0.45 | $1.34 | 10.67% |
By conducting a comprehensive analysis of Salesforce, the following trends become evident:
-
The Price to Earnings ratio of 43.22 is 0.56x lower than the industry average, indicating potential undervaluation for the stock.
-
Considering a Price to Book ratio of 4.11, which is well below the industry average by 0.27x, the stock may be undervalued based on its book value compared to its peers.
-
The Price to Sales ratio is 6.67, which is 0.55x the industry average. This suggests a possible undervaluation based on sales performance.
-
The Return on Equity (ROE) of 2.44% is 4.5% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
-
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.79 Billion, which is 6.2x above the industry average, indicating stronger profitability and robust cash flow generation.
-
The company has higher gross profit of $7.17 Billion, which indicates 5.35x above the industry average, indicating stronger profitability and higher earnings from its core operations.
-
With a revenue growth of 8.39%, which is much lower than the industry average of 10.67%, the company is experiencing a notable slowdown in sales expansion.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
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 comparing Salesforce with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
-
Among its top 4 peers, Salesforce has a stronger financial position with a lower debt-to-equity ratio of 0.2.
-
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
For Salesforce, the PE, PB, and PS ratios are all low compared to industry peers, indicating potential undervaluation. However, the low ROE suggests lower profitability compared to peers. The high EBITDA and gross profit levels are positive indicators of strong financial performance. The low revenue growth rate may be a concern for future prospects compared to industry peers in the Software sector.
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.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
