Advertisement
Singapore markets closed
  • Straits Times Index

    3,487.91
    -11.98 (-0.34%)
     
  • S&P 500

    5,631.22
    +15.87 (+0.28%)
     
  • Dow

    40,211.72
    +210.82 (+0.53%)
     
  • Nasdaq

    18,472.57
    +74.17 (+0.40%)
     
  • Bitcoin USD

    63,536.21
    +1,014.91 (+1.62%)
     
  • CMC Crypto 200

    1,325.11
    -15.85 (-1.18%)
     
  • FTSE 100

    8,161.35
    -21.61 (-0.26%)
     
  • Gold

    2,444.60
    +15.70 (+0.65%)
     
  • Crude Oil

    81.08
    -0.83 (-1.01%)
     
  • 10-Yr Bond

    4.2290
    +0.0400 (+0.95%)
     
  • Nikkei

    41,275.08
    +84.40 (+0.20%)
     
  • Hang Seng

    17,727.98
    -287.96 (-1.60%)
     
  • FTSE Bursa Malaysia

    1,625.96
    -3.86 (-0.24%)
     
  • Jakarta Composite Index

    7,224.29
    -54.57 (-0.75%)
     
  • PSE Index

    6,667.09
    -22.28 (-0.33%)
     

Investors in Salesforce (NYSE:CRM) have seen respectable returns of 56% over the past five years

Salesforce, Inc. (NYSE:CRM) shareholders might be concerned after seeing the share price drop 25% in the last quarter. But the silver lining is the stock is up over five years. Unfortunately its return of 56% is below the market return of 100%.

So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

View our latest analysis for Salesforce

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

ADVERTISEMENT

Over half a decade, Salesforce managed to grow its earnings per share at 30% a year. The EPS growth is more impressive than the yearly share price gain of 9% over the same period. So one could conclude that the broader market has become more cautious towards the stock.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
earnings-per-share-growth

We know that Salesforce has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

A Different Perspective

Salesforce shareholders gained a total return of 11% during the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 9% over half a decade It is possible that returns will improve along with the business fundamentals. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Salesforce you should be aware of.

Of course Salesforce may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com