In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess 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 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 | 47.09 | 4.25 | 7.20 | 2.57% | $2.6 | $6.97 | 10.74% |
| SAP SE | 91.45 | 5.53 | 7.13 | 2.1% | $1.94 | $6.02 | 9.72% |
| Adobe Inc | 50.61 | 16.80 | 12.56 | 10.38% | $2.19 | $4.71 | 10.24% |
| Intuit Inc | 61.67 | 9.94 | 11.97 | 13.4% | $3.34 | $5.67 | 11.95% |
| Synopsys Inc | 60.74 | 11.93 | 13.72 | 4.23% | $0.41 | $1.15 | 15.2% |
| Cadence Design Systems Inc | 72.89 | 18.08 | 18.46 | 5.86% | $0.38 | $0.92 | 8.61% |
| Palantir Technologies Inc | 190.12 | 17.87 | 30.97 | 3.43% | $0.11 | $0.55 | 27.15% |
| Workday Inc | 41.44 | 7.56 | 8.22 | 1.32% | $0.23 | $1.5 | 18.17% |
| Roper Technologies Inc | 40.92 | 3.24 | 8.97 | 1.88% | $0.69 | $1.19 | 12.12% |
| Autodesk Inc | 54.38 | 24.94 | 9.58 | 12.55% | $0.34 | $1.28 | 11.66% |
| Datadog Inc | 247.02 | 16.26 | 17.86 | 1.9% | $0.06 | $0.52 | 26.66% |
| AppLovin Corp | 37 | 35.52 | 7.67 | 39.35% | $0.51 | $0.8 | 43.98% |
| Ansys Inc | 57.60 | 5.10 | 12.29 | 2.37% | $0.2 | $0.52 | 19.64% |
| Tyler Technologies Inc | 119.39 | 7.86 | 12.24 | 2.2% | $0.12 | $0.24 | 7.28% |
| PTC Inc | 71.91 | 7.02 | 9.57 | 2.32% | $0.13 | $0.41 | -4.37% |
| Zoom Video Communications Inc | 21.82 | 2.20 | 4.03 | 2.65% | $0.23 | $0.87 | 3.25% |
| Manhattan Associates Inc | 78.46 | 65.50 | 16.13 | 21.98% | $0.07 | $0.15 | 14.85% |
| Dynatrace Inc | 95.94 | 7.19 | 10.01 | 1.89% | $0.06 | $0.32 | 19.93% |
| Bentley Systems Inc | 43.08 | 15.22 | 12.85 | 7.52% | $0.1 | $0.27 | 11.32% |
| Average | 79.8 | 15.43 | 12.46 | 7.63% | $0.62 | $1.5 | 14.85% |
When conducting a detailed analysis of Salesforce, the following trends become clear:
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At 47.09, the stock's Price to Earnings ratio is 0.59x less than the industry average, suggesting favorable growth potential.
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Considering a Price to Book ratio of 4.25, which is well below the industry average by 0.28x, the stock may be undervalued based on its book value compared to its peers.
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With a relatively low Price to Sales ratio of 7.2, which is 0.58x the industry average, the stock might be considered undervalued based on sales performance.
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With a Return on Equity (ROE) of 2.57% that is 5.06% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.6 Billion, which is 4.19x above the industry average, indicating stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $6.97 Billion, which indicates 4.65x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 10.74% is significantly lower compared to the industry average of 14.85%. This indicates a potential fall in the company's sales performance.
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 evaluating Salesforce alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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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 0.21, 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 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 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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