In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Salesforce CRM in comparison to its major competitors within the Software industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 108.89 | 4.77 | 8.31 | 2.11% | $2.42 | $6.57 | 11.27% |
| Adobe Inc | 45.85 | 14.83 | 12.82 | 9.18% | $2.06 | $4.41 | 11.56% |
| SAP SE | 53.69 | 4.44 | 6.19 | 2.75% | $2.23 | $6.2 | 9.34% |
| Intuit Inc | 70.79 | 10.65 | 12.39 | 1.41% | $0.53 | $2.22 | 14.67% |
| Synopsys Inc | 69.19 | 13.60 | 14.55 | 5.77% | $0.48 | $1.27 | 24.51% |
| Cadence Design Systems Inc | 76.47 | 23.36 | 19.48 | 9.94% | $0.41 | $0.96 | 18.75% |
| Workday Inc | 1258.25 | 11.99 | 11.35 | 1.76% | $0.23 | $1.42 | 16.67% |
| Roper Technologies Inc | 42.73 | 3.33 | 9.46 | 2.26% | $0.72 | $1.13 | 3.2% |
| Autodesk Inc | 60.22 | 36.85 | 10.34 | 17.93% | $0.37 | $1.29 | 10.47% |
| Palantir Technologies Inc | 260 | 14.90 | 24.17 | 2.8% | $0.11 | $0.5 | 8.99% |
| Datadog Inc | 911.86 | 20.71 | 21.01 | 2.82% | $0.07 | $0.48 | 7.69% |
| Ansys Inc | 60.06 | 5.77 | 13.44 | 1.12% | $0.11 | $0.39 | -2.9% |
| Splunk Inc | 225.23 | 131.70 | 6.48 | 121.15% | $0.14 | $0.86 | 14.8% |
| PTC Inc | 89.32 | 7.53 | 9.70 | 2.42% | $0.16 | $0.44 | 18.09% |
| AppLovin Corp | 58.49 | 15.51 | 6.33 | 14.58% | $0.37 | $0.68 | 10.3% |
| Zoom Video Communications Inc | 80.67 | 2.52 | 4.16 | 1.96% | $0.2 | $0.87 | 3.16% |
| Tyler Technologies Inc | 112.21 | 6.24 | 9.54 | 1.34% | $0.09 | $0.21 | -2.78% |
| Bentley Systems Inc | 95.20 | 22.41 | 14.42 | 7.94% | $0.1 | $0.24 | 14.27% |
| Manhattan Associates Inc | 86.06 | 53.69 | 16.36 | 19.96% | $0.06 | $0.13 | 20.27% |
| Dynatrace Inc | 76.15 | 7.77 | 10.95 | 2.3% | $0.05 | $0.3 | 22.74% |
| NICE Ltd | 46.33 | 4.49 | 6.53 | 2.89% | $0.16 | $0.41 | 8.4% |
| Average | 188.94 | 20.61 | 11.98 | 11.61% | $0.43 | $1.22 | 11.61% |
Upon analyzing Salesforce, the following trends can be observed:
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The stock's Price to Earnings ratio of 108.89 is lower than the industry average by 0.58x, suggesting potential value in the eyes of market participants.
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The current Price to Book ratio of 4.77, which is 0.23x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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The Price to Sales ratio is 8.31, which is 0.69x the industry average. This suggests a possible undervaluation based on sales performance.
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The company has a lower Return on Equity (ROE) of 2.11%, which is 9.5% 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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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.42 Billion is 5.63x 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 5.39x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 11.27% is significantly below the industry average of 11.61%. This suggests a potential struggle in generating increased sales volume.
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.
When comparing Salesforce with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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Salesforce demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.22, the company relies less on debt financing and maintains a healthier 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 its peers in the Software industry, indicating potential undervaluation. However, the low ROE suggests lower profitability relative to competitors. On the positive side, Salesforce's high EBITDA and gross profit signify strong operational performance, while the low revenue growth may raise concerns about future prospects compared to industry peers.
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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