Salesforce.com (CRM) Surges 3.1%: Is This an Indication of Further Gains?
Salesforce.com CRM shares ended the last trading session 3.1% higher at $155.87. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 16.9% gain over the past four weeks.
Shares of Salesforce gained on reports that activist investor Elliot Investment Management took a multi-billion-dollar stake in the business software making company. Elliot’s latest stake buyout is expected to raise pressure on Salesforce management to make operational improvements and increase profit margins.
The cloud-based software maker has already initiated a broader restructuring plan to improve profitability. Under the plan, it intends to lay off approximately 10% of its total global workforce, exit real estate and shut down office spaces in certain markets.
This customer-management software developer is expected to post quarterly earnings of $1.36 per share in its upcoming report, which represents a year-over-year change of +61.9%. Revenues are expected to be $7.99 billion, up 9% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Salesforce.com, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on CRM going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Salesforce.com belongs to the Zacks Computer - Software industry. Another stock from the same industry, MicroStrategy MSTR, closed the last trading session 4.2% higher at $250.22. Over the past month, MSTR has returned 47.6%.
MicroStrategy's consensus EPS estimate for the upcoming report has changed -4.5% over the past month to $0.53. Compared to the company's year-ago EPS, this represents a change of +106.3%. MicroStrategy currently boasts a Zacks Rank of #3 (Hold).
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