Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Salesforce CRM in comparison to its major competitors within the Software industry. By analyzing critical 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 | 64.03 | 4.37 | 7.59 | 2.46% | $2.75 | $7.14 | 10.77% |
| SAP SE | 83.79 | 4.59 | 6.29 | -1.92% | $-0.42 | $5.76 | 8.06% |
| Adobe Inc | 44.18 | 13.40 | 10.63 | 3.88% | $1.21 | $4.59 | 11.32% |
| Intuit Inc | 63.90 | 10.36 | 11.75 | 2.08% | $0.6 | $2.53 | 11.34% |
| Synopsys Inc | 58.56 | 12.13 | 13.44 | 7.01% | $0.53 | $1.32 | 21.15% |
| Cadence Design Systems Inc | 71.75 | 21.02 | 18.44 | 7.1% | $0.36 | $0.88 | -1.23% |
| Workday Inc | 46.97 | 8 | 8.94 | 16.16% | $0.24 | $1.46 | 16.75% |
| Roper Technologies Inc | 37.53 | 3.07 | 8.61 | 2.17% | $0.73 | $1.18 | 4.16% |
| Palantir Technologies Inc | 244.11 | 14.08 | 22.69 | 2.8% | $0.11 | $0.5 | 19.61% |
| Autodesk Inc | 50.80 | 24.55 | 8.36 | 16.9% | $0.35 | $1.34 | 3.89% |
| Datadog Inc | 896.43 | 20.71 | 20.66 | 2.82% | $0.07 | $0.48 | 25.62% |
| Ansys Inc | 56.69 | 5.26 | 12.50 | 5.29% | $0.37 | $0.74 | 15.99% |
| AppLovin Corp | 71.96 | 18.47 | 7.79 | 14.58% | $0.37 | $0.68 | 35.73% |
| PTC Inc | 89.62 | 7.56 | 9.74 | 2.42% | $0.16 | $0.44 | 18.09% |
| Tyler Technologies Inc | 104.66 | 6.48 | 9.94 | 1.82% | $0.11 | $0.22 | 8.58% |
| Zoom Video Communications Inc | 29.52 | 2.34 | 4.16 | 3.87% | $0.2 | $0.87 | 2.56% |
| Bentley Systems Inc | 52.49 | 17.82 | 14.21 | 22.81% | $0.05 | $0.24 | 8.26% |
| NICE Ltd | 43.73 | 4.22 | 6.23 | 2.49% | $0.19 | $0.42 | 9.61% |
| Dynatrace Inc | 68.65 | 7.01 | 9.87 | 2.3% | $0.05 | $0.3 | 22.74% |
| Manhattan Associates Inc | 67.34 | 52.95 | 13.39 | 20.78% | $0.06 | $0.14 | 15.18% |
| Average | 114.88 | 13.37 | 11.45 | 7.12% | $0.28 | $1.27 | 13.55% |
Through a meticulous analysis of Salesforce, we can observe the following trends:
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The stock's Price to Earnings ratio of 64.03 is lower than the industry average by 0.56x, suggesting potential value in the eyes of market participants.
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Considering a Price to Book ratio of 4.37, which is well below the industry average by 0.33x, the stock may be undervalued based on its book value compared to its peers.
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Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 7.59, which is 0.66x the industry average.
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The Return on Equity (ROE) of 2.46% is 4.66% below the industry average, suggesting 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 $2.75 Billion, which is 9.82x above the industry average, indicating stronger profitability and robust cash flow generation.
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The gross profit of $7.14 Billion is 5.62x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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With a revenue growth of 10.77%, which is much lower than the industry average of 13.55%, the company is experiencing a notable slowdown in sales expansion.
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 examining Salesforce in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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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
In comparison to its peers in the Software industry, Salesforce exhibits low PE, PB, and PS ratios, indicating potential undervaluation. However, the company's low ROE suggests lower profitability compared to industry peers. On the positive side, Salesforce demonstrates high EBITDA and gross profit figures, reflecting strong operational performance. The low revenue growth rate may raise concerns about the company's future prospects in the competitive industry landscape.
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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