Latest news with #EarningsESP
Globe and Mail
27-05-2025
- Business
- Globe and Mail
Zscaler to Post Q3 Earnings: Time to Buy, Sell or Hold the Stock?
Zscaler ZS is scheduled to report its third-quarter fiscal 2025 results on May 29, 2025. Zscaler anticipates revenues between $665 million and $667 million for third-quarter fiscal 2025. The Zacks Consensus Estimate for ZS' fiscal third-quarter revenues is pegged at $666.1 million, indicating year-over-year growth of 20.4%. For the fiscal third quarter, the company expects non-GAAP earnings per share in the band of 75-76 cents. The Zacks Consensus Estimate for ZS' fiscal third-quarter earnings is pegged at 75 cents per share, which remained unchanged over the past 60 days and indicates a year-over-year decline of 14.8%. Zscaler's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 24.55%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Zscaler, Inc. Price and EPS Surprise Zscaler, Inc. price-eps-surprise | Zscaler, Inc. Quote Earnings Whispers for Zscaler Our proven model does not conclusively predict an earnings beat for Zscaler this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today's Zacks #1 Rank stocks here. Though Zscaler currently carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. Factors to Note for Zscaler's Q3 Results Zscaler's third-quarter results are expected to show sustained demand for its security and networking solutions, given the persistent expansion of the global security space. The adoption of ZS' in-cloud security solution, Zero Trust Exchange, driven by the ongoing digital transformation across organizations and the growing popularity of hybrid work, is likely to have been a key catalyst. The growing adoption of Software-Defined Wide Area Network (SD-WAN) solutions might have acted as a primary driver in the fiscal third quarter. Per the latest Future Market Insights report, the market size for SD-WAN solutions and products is expected to reach $80.91 billion by 2034 from $5.36 billion in 2024, witnessing a CAGR of 31.6%. As only a select number of vendors offer security and SD-WAN solutions, Zscaler has been gaining from the increasing opportunities in this space. The company's partnerships with VMware and Silver Peak have enabled it to secure SD-WAN deliveries. This is expected to have aided Zscaler's fiscal third-quarter performance. ZS' existing core products, mainly the Zscaler Internet Access and Zscaler Private Access, have been driving customer retention. The addition of new features to its Zero Trust Exchange, such as Cloud Access Security Broker, Cloud Browser Isolation, Cloud Protection, Zscaler Digital Experience and Cloud Security Posture Management for software-as-a-service applications, is expected to have driven its product portfolio expansion and customer acquisition. Generative AI and Agentic AI are also acting as a growth pillar for Zscaler. The company now serves 14 out of 15 U.S. cabinet-level agencies. This is likely to have provided stability to Zscaler's top line in the to-be-reported quarter. Our model estimates for third-quarter revenues from Channel Partners and Direct Customers are pegged at $588 million and $77.4 million, respectively. We expect the remaining performance obligation at the end of the quarter to be approximately $4.65 billion. However, as customers scrutinize large deals more closely, with continued tight IT budgets, Zscaler faces longer deal cycles. To counter this, Zscaler is growing investments to improve sales and marketing (S&M) capabilities and higher research and development (R&D) costs, which might have weighed on the company's fiscal third-quarter bottom line. ZS Price Performance & Stock Valuation Zscaler's shares have gained 40.9% year to date, outperforming the Zacks Security industry's growth of 16.9%. The stock has also outperformed its peers in the cloud-based security solution space, such as Palo Alto Networks PANW, CrowdStrike Holdings CRWD and CyberArk Software CYBR, which have risen 2.7%, 33.2% and 14.5%, respectively, in the same time frame. Now, let's look at the value Zscaler offers investors at the current levels. ZS stock is trading at a discount with a forward 12-month P/S of 12.79X compared with the industry's 14.21X, reflecting an undervaluation. Investment Thesis for Zscaler Zscaler is benefiting from the rising demand for cybersecurity solutions due to the slew of data breaches. The increasing demand for privileged access security in digital transformation and cloud migration strategies is a key growth driver. A strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education, safeguards it from the negative impacts of ongoing macroeconomic headwinds. Portfolio expansion through acquisitions like Avalor, Canonic Security and ShiftRight is praiseworthy. However, Zscaler faces intense competition from other established cybersecurity players, including Palo Alto Networks, CyberArk and CrowdStrike. Zscaler Internet Access and Private Access face competition from Palo Alto Networks Prisma Access, Prisma SD-WAN, CrowdStrike Falcon Zero Trust, CyberArk Secure Web Sessions and CYBR Identity Security Platform. To survive in the highly competitive cybersecurity market, Zscaler is continuously investing in broadening its capabilities. Over the past few years, Zscaler has invested heavily to enhance its S&M capabilities, particularly by increasing the sales force. Unfortunately, its aggressive investment in S&M and R&D might weigh on its near-term profitability. Conclusion: Hold ZS Stock for Now While the long-term prospects for the company remain bright, the near-term challenges associated with its profit growth warrant caution. Therefore, we believe that it's prudent to avoid making new investments in the stock for now. For existing shareholders, holding on to Zscaler stock is the best course of action, as the long-term growth drivers are still firmly in place. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> 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 Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report CyberArk Software Ltd. (CYBR): Free Stock Analysis Report Zscaler, Inc. (ZS): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis Report
Globe and Mail
26-05-2025
- Business
- Globe and Mail
Should You Buy, Hold, or Sell PDD Holdings Stock Before Q1 Earnings?
PDD Holdings PDD is slated to report first-quarter 2025 results on May 27. For the first quarter, the Zacks Consensus Estimate for revenues is pegged at $14.17 billion, indicating growth of 17.82% from the year-ago quarter's reported figure. The consensus mark for earnings is pinned at $2.49 per share, suggesting a 12.01% decline from the prior-year quarter's reported number. Find the latest EPS estimates and surprises on Zacks Earnings Calendar. PDD has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 7.81%. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, the average surprise being 22.35%. PDD Holdings Inc. Sponsored ADR Price and EPS Surprise PDD Holdings Inc. Sponsored ADR price-eps-surprise | PDD Holdings Inc. Sponsored ADR Quote Earnings Whispers Our proven model does not conclusively predict an earnings beat for PDD Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. PDD has an Earnings ESP of 0.00% and carries a Zacks Rank #3 at present. You can see the complete list of today's Zacks #1 Rank stocks here. Factors Shaping Q1 Results PDD Holdings approaches its first-quarter 2025 earnings report with investors closely monitoring the company's ability to navigate ongoing strategic transitions while managing competitive pressures. The e-commerce giant's fourth-quarter 2024 results revealed a notable deceleration in revenue growth to 24% year over year, down from the robust 59% full-year growth rate, signaling potential headwinds that likely persisted into the first quarter of 2025. The company's aggressive investment in its "high-quality development strategy" has intensified during recent quarters, with management implementing substantial ecosystem investments, including the 10 billion RMB fee reduction program and comprehensive merchant support initiatives. These strategic moves, while positioning PDD for long-term sustainable growth, have created near-term pressure on profitability margins and revenue acceleration. The impact of these investments is likely to have continued, affecting first-quarter performance, as management previously indicated expectations for fluctuations in both revenue growth and profit margins during this transition period. Competitive dynamics in China's e-commerce landscape have intensified significantly, with management acknowledging fierce competition as a persistent challenge. This environment has compelled PDD to increase marketing expenditures and promotional activities to maintain market positioning against behemoths like Amazon AMZN, eBay EBAY and Alibaba BABA, factors that probably influenced first-quarter results. The company's sales and marketing expenses represented 28% of revenues in fourth-quarter 2024, and similar elevated spending levels are likely to have continued into first-quarter 2025. PDD's global business segment faces additional complexities, with management citing accelerating changes in external environments and potential macro policy shifts. These international headwinds, combined with ongoing compliance investments and localization efforts, might have contributed to mixed performance in the company's overseas operations during the first quarter. Given the combined impact of strategic investments, competitive intensity, and external uncertainties, PDD's first-quarter results are likely to reflect continued revenue growth moderation alongside margin fluctuations. While the company's long-term positioning appears solid through its ecosystem development approach, near-term performance volatility suggests investors may benefit from maintaining current positions or waiting for more attractive entry points. Price Performance & Stock Valuation PDD shares have increased 22.9% in the year-to-date period, outperforming the industry 's growth of 0.5% and the S&P 500 index's decline of 1.8%. Year-to-date Price Performance Now, let us look at the value that PDD Holdings offers to its investors at current levels. Currently, PDD is trading at a discount with a forward 12-month P/E of 9.46X compared with the industry's 22.79X, reflecting a good investment opportunity. PDD's P/E F12M Ratio Depicts Discounted Valuation Investment Thesis PDD Holdings presents a compelling risk-reward proposition trading at discounted valuations amid strategic transformation challenges. While the company faces intensifying competition in China's e-commerce market and revenue growth deceleration, management's substantial ecosystem investments through fee reductions and merchant support programs position PDD for sustainable long-term competitive advantages. The ongoing transition creates near-term volatility in margins and growth rates, but the company's focus on high-quality development and supply chain innovation may eventually differentiate it from competitors. The discounted valuation offers potential upside for patient investors, though competitive pressures and investment phase uncertainties suggest careful timing remains crucial for optimal entry points. Conclusion PDD Holdings' strategic transition creates near-term uncertainty despite attractive valuations and long-term potential. Current shareholders should maintain positions given ecosystem investments and competitive moat development, while prospective investors may benefit from waiting for clearer execution evidence or further compression. The upcoming first-quarter 2025 results will provide critical insights into management's ability to balance growth investments with profitability. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> 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 eBay Inc. (EBAY): Free Stock Analysis Report Alibaba Group Holding Limited (BABA): Free Stock Analysis Report PDD Holdings Inc. Sponsored ADR (PDD): Free Stock Analysis Report
Globe and Mail
26-05-2025
- Business
- Globe and Mail
MRVL to Post Q1 Earnings: Time to Buy, Sell or Hold the Stock?
Marvell Technology, Inc. MRVL is scheduled to report first-quarter fiscal 2026 results after market close on May 29, 2025. Marvell Technology anticipates revenues of $1.875 billion (+/- 5%) for first-quarter fiscal 2026. The Zacks Consensus Estimate for MRVL's fiscal first-quarter revenues is pegged at $1.88 billion, indicating year-over-year growth of 61.6%. For the fiscal first quarter, the company expects non-GAAP earnings of 61 cents per share (+/- 5 cents per share). The Zacks Consensus Estimate for MRVL's fiscal first-quarter earnings is pegged at 61 cents per share, reflecting a 154.2% increase year over year. The consensus mark for earnings has remained unchanged over the past 60 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) In the trailing four quarters, Marvell Technology's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 4.25%. Marvell Technology, Inc. Price and EPS Surprise Marvell Technology, Inc. price-eps-surprise | Marvell Technology, Inc. Quote Earnings Whispers for MRVL Stock Our proven model does not conclusively predict an earnings beat for Marvell Technology this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. Though Marvell Technology currently carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today's Zacks #1 Rank stocks here. Factors Likely to Influence Marvell's Q1 Results Marvell Technology's overall first-quarter revenues are likely to have benefited from improved performance across the majority of its end markets. The company's data center division continues to be the primary engine of growth, benefiting from the rising demand for electro-optics products, custom artificial intelligence (AI) silicon and next-generation switches. Our model estimates suggest that first-quarter data center revenues will reach $1.395 billion, implying a 2.1% sequential growth. The growing adoption of 800-gig PAM products and 400ZR data center interconnect solutions is fueling top-line expansion. Additionally, advancements in Compute Express Link technology and increased AI-related investments position Marvell as a key player in the high-performance computing ecosystem. Improved inventory corrections and recovering demand are helping Marvell's Networking and Carrier segments rebound. Our projections indicate that Enterprise Networking and Carrier revenues will each rise 8.1% and 9% sequentially, reaching $114.4 million and $186.9 million, respectively. Marvell Technology's carrier segment is benefiting from new design wins in cloud-driven networking solutions. As telecom providers upgrade their infrastructure for AI-driven applications, MRVL's networking division should continue to see steady improvements. The Automotive and Industrial divisions have been a consistent revenue contributor for Marvell Technology, thanks to the increasing semiconductor content in vehicles and industrial automation growth. For the first quarter, our model estimates for Automotive/Industrial revenues are pegged at $88.9 million, indicating a 3.7% sequential improvement. With automakers ramping up production of connected and electric vehicles, Marvell Technology's automotive ethernet solutions and advanced driver-assistance system technologies should continue to see steady adoption. Despite the strength of Marvell Technology's data center, networking and AI segments, its consumer end market remains a weak spot. Seasonality in gaming and broader macroeconomic uncertainty might have resulted in weak revenues in this segment. MRVL Stock Price Performance & Valuation In the past year, MRVL shares have plunged 20.9%, underperforming the Zacks Electronics – Semiconductors industry's growth of 14.1%. Now, let's look at the value Marvell Technology offers investors at the current levels. MRVL stock trades at a discounted price with a forward 12-month price-to-sales (P/S) multiple of 5.99X compared with the industry's 7.54X. Investment Consideration for MRVL Marvell Technology's custom silicon business is a game-changer, particularly in the booming data center market. Cloud service providers rely on their highly specialized chips to optimize AI computing efficiency, networking speed and energy consumption. Furthermore, Marvell Technology has also formed strong collaborations with industry leaders, including NVIDIA NVDA, Juniper Networks JNPR and Coherent Corp. COHR, to design high-speed networking technology for AI workloads. Marvell Technology and NVIDIA have collaborated to integrate MRVL's optical interconnect solutions with NVIDIA's AI and computing technology. Using the NVIDIA HGX H100 eight-GPU platform, BlueField-3 DPUs, Spectrum-X networking, and Marvell's interconnects, they have developed NVIDIA Israel-1 to power AI applications with high efficiency. Marvell Technology has collaborated with Juniper Networks and Coherent Corp. to develop 800ZR networking solutions. Together, these companies combined Juniper's PTX10002-36QDD Packet Transport Router, Coherent's 800ZR transceiver, and MRVL's Orion 800G coherent DSP to develop a networking solution to support AI, cloud, and 5G. However, the U.S. government's recent steps toward China have also been a matter of concern for Marvell Technology as the company generates significant revenues (about 43% of its fiscal 2025 total revenues) from the Chinese market. As Marvell Technology owns research and development facilities in China and outsources to China, the growing geopolitical tension, fear of fresh sanctions and persistent tariff threats have added to investors' skepticism. However, given the MRVL's strong fundamentals, investors' concerns seem overblown. The recent U.S.-China agreement to temporarily reduce tariffs on each other's goods can provide relief to Marvell Technology's business for the near term. Conclusion: Buy MRVL Before Q1 Results Marvell Technology's upcoming quarterly results are likely to demonstrate the beginning of a multi-year growth story fueled by AI innovation. However, the company also suffers from the U.S.-China trade war as it highly depends on both nations. all these factors, we suggest that investors should retain MRVL stock at present. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> 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 Juniper Networks, Inc. (JNPR): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Marvell Technology, Inc. (MRVL): Free Stock Analysis Report Coherent Corp. (COHR): Free Stock Analysis Report This article originally published on Zacks Investment Research (
Yahoo
22-05-2025
- Business
- Yahoo
Earnings Preview: Foot Locker (FL) Q1 Earnings Expected to Decline
Foot Locker (FL) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended April 2025. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on May 29. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This shoe store is expected to post quarterly loss of $0.05 per share in its upcoming report, which represents a year-over-year change of -122.7%. Revenues are expected to be $1.83 billion, down 2.8% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 49.04% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Foot Locker, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -26.99%. On the other hand, the stock currently carries a Zacks Rank of #4. So, this combination makes it difficult to conclusively predict that Foot Locker will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Foot Locker would post earnings of $0.73 per share when it actually produced earnings of $0.86, delivering a surprise of +17.81%. Over the last four quarters, the company has beaten consensus EPS estimates three times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Foot Locker doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. 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 Foot Locker, Inc. (FL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Globe and Mail
22-05-2025
- Business
- Globe and Mail
Salesforce Gears Up to Post Q1 Earnings: How to Play the Stock?
Salesforce CRM is scheduled to release first-quarter fiscal 2026 results on May 28. For the fiscal first quarter, the company expects total revenues to be between $9.71 billion and $9.76 billion (midpoint $9.735 billion). The top-line estimate is pegged at $9.74 billion, which indicates an increase of 6.6% from the year-ago quarter's reported figure. CRM anticipates non-GAAP earnings per share to be in the band of $2.53-$2.55 for the first quarter. The consensus mark for non-GAAP earnings has remained unchanged at $2.54 per share over the past 60 days, which calls for a 4.1% increase from the year-ago quarter's level. Salesforce's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one, the average surprise being 4.4%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Salesforce Inc. Price and EPS Surprise Salesforce Inc. price-eps-surprise | Salesforce Inc. Quote Earnings Whispers for Salesforce Our proven model predicts an earnings beat for Salesforce this earnings 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, which is exactly the case here. CRM's Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($2.56 per share) and the Zacks Consensus Estimate ($2.54 per share), is +0.76%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. Salesforce's Zacks Rank: CRM carries a Zacks Rank #3 at present. You can see the complete list of today's Zacks #1 Rank stocks here. Factors Likely to Influence Salesforce's Q1 Results Salesforce appears well-positioned to report strong first-quarter results, driven by its strategic focus on digital transformation and cloud solutions. With businesses globally undergoing digital overhauls, Salesforce's commitment to aligning its product offerings with customer needs is likely to have boosted its revenues for the quarter. The growing demand for generative AI-enabled cloud solutions has been a major catalyst for Salesforce. By embedding generative AI tools across its products, the company not only enhances customer engagement but also strengthens its competitive position in the customer relationship management space. This forward-thinking approach might have significantly contributed to its top-line growth during the to-be-reported quarter. Salesforce's ability to deepen relationships with leading brands across industries and expand its reach in key geographic markets remains a cornerstone of its growth strategy. The company's increasing footprint in the public sector is likely to have provided a further boost, unlocking new growth opportunities during the first quarter. The acquisitions of Spiff, Own and Zoomin have been pivotal in enhancing Salesforce's capabilities and diversifying its revenue base. These additions are likely to have driven higher subscription revenues, particularly across its core cloud services. Salesforce's key cloud offerings, including Sales, Service, Platform & Other, Marketing & Commerce and Data, are expected to have delivered robust growth. Our first-quarter revenue estimates for Sales, Service, Platform & Other, Marketing & Commerce and Data cloud services are pegged at $2.14 billion, $2.34 billion, $1.84 billion, $1.35 billion and $1.54 billion, respectively. We expect revenues of approximately $9.21 billion and $518.8 million for the Subscription and Support segment and the Professional Services division, respectively. The ongoing cost restructuring initiative is likely to have boosted Salesforce's profitability in the first quarter. The company's fourth-quarter fiscal 2025 non-GAAP operating margin expanded 170 basis points to 33.1%, mainly driven by an improved gross margin and the benefits of cost restructuring initiatives, which include the trimming of the workforce and a reduction in office spaces. CRM's Price Performance & Valuation Over the past year, Salesforce shares have risen 1.4%, underperforming the Zacks Computer – Software industry's growth of 10.4%. Compared to its peers, CRM stock has also underperformed other enterprise software makers, including SAP SE SAP, Oracle ORCL and Microsoft MSFT. Over the past year, shares of SAP, Oracle and Microsoft have gained 53.1%, 26.7% and 6%, respectively. One-Year Price Return Performance Now, let's look at the value Salesforce offers investors at the current levels. CRM stock is trading at a discount with a forward 12-month P/S of 6.48X compared with the industry's 9.25X. CRM stock also trades at a discounted multiple compared with SAP, Oracle and Microsoft. At present, SAP, Oracle and Microsoft have P/S multiples of 8.38X, 6.77X and 10.87X, respectively. Investment Thesis for Salesforce Stock Salesforce is the undisputed leader in the customer relationship management industry, consistently outpacing rivals like Microsoft, Oracle and SAP. Gartner's annual rankings reaffirm its top position year after year. Its ability to maintain this dominance stems from its expansive product suite, seamless integrations and innovative approach to enterprise solutions. Strategic acquisitions have played a crucial role in strengthening its market position. The $27.7-billion acquisition of Slack in 2021 significantly enhanced its collaboration capabilities, making Salesforce a comprehensive enterprise software provider. More recently, the $1.9-billion acquisition of Own Company in 2024 bolstered its data protection and AI capabilities, a move that aligns with growing enterprise priorities around security and automation. Salesforce's AI initiatives further cement its leadership. Since introducing Einstein GPT in March 2023, the company has expanded its AI-driven functionalities across its entire ecosystem. This technology enhances automation, streamlines workflows and improves customer interactions, giving Salesforce a significant advantage as AI adoption accelerates across industries. Additionally, Salesforce is positioned to benefit from the continued rise in worldwide IT spending. Gartner projects global IT spending to reach $5.61 trillion in 2025, implying a 9.8% year-over-year increase. Enterprise software spending is expected to grow even faster, rising 14.2% year over year. As digital transformation remains a top priority for businesses, Salesforce is well-positioned to capture a substantial share of these increasing budgets. Conclusion: Hold CRM Stock Ahead of Q1 Results The company's leadership in customer relationship management, aggressive AI expansion and increasing enterprise IT spending trends create a solid foundation for sustained growth. Its ability to deliver earnings growth despite ongoing macroeconomic uncertainties makes the stock worth holding. Only $1 to See All Zacks' Buys and Sells We're not kidding. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone. See Stocks Now >> 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 Microsoft Corporation (MSFT): Free Stock Analysis Report Salesforce Inc. (CRM): Free Stock Analysis Report SAP SE (SAP): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report
