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 | 47.19 | 4.49 | 7.28 | 2.44% | $2.79 | $7.17 | 8.39% |
| SAP SE | 93.59 | 5.66 | 7.30 | 2.1% | $1.94 | $6.02 | 9.72% |
| Adobe Inc | 42.57 | 15.22 | 10.89 | 11.46% | $2.31 | $4.85 | 10.59% |
| Intuit Inc | 58.14 | 9.22 | 10.58 | -0.11% | $0.13 | $2.4 | 17.4% |
| Palantir Technologies Inc | 214.47 | 20.16 | 34.94 | 3.43% | $0.11 | $0.55 | 27.15% |
| Synopsys Inc | 51.10 | 9.87 | 11.90 | 5.49% | $0.46 | $1.24 | 12.65% |
| Cadence Design Systems Inc | 68.24 | 16.93 | 17.28 | 5.86% | $0.38 | $0.92 | 8.61% |
| Workday Inc | 41.50 | 7.64 | 8.22 | 1.6% | $0.28 | $1.57 | 16.68% |
| Roper Technologies Inc | 40.98 | 3.24 | 8.99 | 1.88% | $0.69 | $1.19 | 12.12% |
| Autodesk Inc | 54.78 | 23.29 | 9.97 | 12.17% | $0.39 | $1.36 | 11.9% |
| AppLovin Corp | 55.84 | 53.60 | 11.57 | 39.35% | $0.51 | $0.8 | 43.98% |
| Datadog Inc | 242.55 | 15.97 | 17.54 | 1.9% | $0.06 | $0.52 | 26.66% |
| Ansys Inc | 55.28 | 4.89 | 11.79 | 2.37% | $0.2 | $0.52 | 19.64% |
| Tyler Technologies Inc | 119.80 | 7.88 | 12.28 | 2.2% | $0.12 | $0.24 | 7.28% |
| PTC Inc | 71.89 | 7.02 | 9.56 | 2.32% | $0.13 | $0.41 | -4.37% |
| Zoom Video Communications Inc | 24.51 | 2.48 | 4.69 | 2.6% | $0.23 | $0.88 | 2.09% |
| Manhattan Associates Inc | 83.78 | 69.94 | 17.22 | 21.98% | $0.07 | $0.15 | 14.85% |
| Dynatrace Inc | 100.23 | 7.51 | 10.46 | 1.89% | $0.06 | $0.32 | 19.93% |
| Bentley Systems Inc | 43.30 | 15.30 | 12.92 | 7.52% | $0.1 | $0.27 | 11.32% |
| Average | 81.25 | 16.43 | 12.67 | 7.0% | $0.45 | $1.34 | 14.9% |
When closely examining Salesforce, the following trends emerge:
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A Price to Earnings ratio of 47.19 significantly below the industry average by 0.58x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The current Price to Book ratio of 4.49, which is 0.27x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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The Price to Sales ratio is 7.28, which is 0.57x the industry average. This suggests a possible undervaluation based on sales performance.
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With a Return on Equity (ROE) of 2.44% that is 4.56% 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 $2.79 Billion is 6.2x above the industry average, highlighting stronger profitability and robust cash flow generation.
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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.
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The company's revenue growth of 8.39% is significantly lower compared to the industry average of 14.9%. 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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Salesforce has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.2.
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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
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.
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