What's in the Offing for Salesforce (CRM) This Earnings Season?

Salesforce CRM is scheduled to release first-quarter fiscal 2023 results on May 31.

For the fiscal first quarter, the company projects total revenues between $7.37 billion and $7.38 billion. Also, non-GAAP earnings are expected between 93 cents and 94 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $7.37 billion, indicating an increase of 23.6% from the year-ago quarter’s reported figure.

The consensus mark for earnings has been pegged at 93 cents per share, revised by a penny downward in the past 30 days. The bottom line is expected to have decreased 23.1% year over year.

Salesforce’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 38.3%.

Let’s see how things have shaped up before this announcement.

Salesforce Inc. Price and EPS Surprise

Salesforce Inc. price-eps-surprise | Salesforce Inc. Quote

Factors to Consider

The company’s quarterly performance is likely to have gained from its firm focus on building and expanding relationships with leading brands across industries and geographies. Also, significant growth opportunities in the public sector are expected to have been a tailwind during the quarter under review.

Salesforce’s first-quarter performance is also likely to have benefited from the robust demand environment as customers have been undergoing a major digital transformation. The customer relationship management software provider’s focus on introducing more aligned products per customer needs is expected to have boosted its top line in the quarter under review.

Salesforce’s ability to offer integrated solutions for customers’ business problems is likely to have been a key growth driver. The firm’s products like Trailhead and myTrailhead are helping companies through their transformation processes along with an increasing business scale with modern technology.

The growth across its four major cloud service offerings, Sales Cloud, Service Cloud, Platform and Other and Marketing & Commerce Cloud, is anticipated to have boosted Salesforce’s subscriptions and supported its revenues, a major catalyst.

Additionally, the acquisitions of the likes of Slack, Mobify and Vlocity are anticipated to have aided CRM’s top line during the to-be-reported quarter.

However, a decline in software spending by small & medium businesses amid the macroeconomic uncertainty due to the pandemic might have affected Salesforce’s fiscal first-quarter performance.

Further, the stiff competition from Oracle and Microsoft is a concern along with forex headwinds. Also, the increasing investments in International expansions and data centers might have eroded the company’s profitability during the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Salesforce this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Salesforce currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -4.71%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Commercial Metals CMC, Dynagas LNG Partners DLNG and The Kroger Company KR have the right combination of elements to post an earnings beat in their upcoming releases.

Commercial Metals carries a Zacks Rank #2 and has an Earnings ESP of +8.63%. The company is scheduled to report third-quarter fiscal 2022 results on Jun 16. Commercial Metals’ earnings surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 16%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CMC’s third-quarter earnings is pegged at $1.97 per share, indicating a year-over-year increase of 89.4%. The consensus mark for revenues stands at $2.34 billion, suggesting a year-over-year increase of 26.9%.

Dynagas LNG Partners is expected to report first-quarter 2022 results on Jun 16. The company carries a Zacks Rank #2 and has an Earnings ESP of +3.03% at present. Dynagas LNG Partners’ earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 8.8%.

The Zacks Consensus Estimate for quarterly earnings is pegged at 17 cents per share, suggesting a year-over-year decline of 19.1%. DLNG’s quarterly revenues are estimated to decline by 6.2% year over year to $31.4 million.

Kroger currently carries a Zacks Rank #2 and has an Earnings ESP of +2.95%. The company is anticipated to report its first-quarter fiscal 2023 results on Jun 16. Kroger’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 22.1%.

The Zacks Consensus Estimate for Kroger’s first-quarter earnings stands at $1.27 per share, implying a year-over-year increase of 6.7%. KR is estimated to report revenues of $43.22 billion, suggesting growth of 4.7% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Salesforce Inc. (CRM) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
Commercial Metals Company (CMC) : Free Stock Analysis Report
 
Dynagas LNG Partners LP (DLNG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.