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In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Salesforce (NYSE:CRM) vis-à-vis its key competitors in the Software industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in the industry.
Salesforce 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 | 43.34 | 3.91 | 6.63 | 2.57% | $2.6 | $6.97 | 10.74% |
| SAP SE | 86.69 | 4.74 | 6.50 | -1.92% | $-0.42 | $5.76 | 8.06% |
| Adobe Inc | 44.19 | 13.41 | 10.63 | 3.88% | $1.21 | $4.59 | 11.32% |
| Intuit Inc | 52.38 | 8.45 | 10.17 | 13.4% | $3.34 | $5.67 | 11.95% |
| Synopsys Inc | 63.24 | 12.42 | 14.28 | 4.23% | $0.41 | $1.15 | 15.2% |
| Cadence Design Systems Inc | 78.34 | 22.97 | 20.13 | 7.1% | $0.36 | $0.88 | -1.23% |
| Roper Technologies Inc | 40.80 | 3.34 | 9.36 | 2.17% | $0.73 | $1.18 | 14.36% |
| Workday Inc | 38.17 | 6.96 | 7.57 | 1.32% | $0.23 | $1.5 | 18.17% |
| Palantir Technologies Inc | 198.75 | 14.07 | 23.95 | 2.91% | $0.09 | $0.52 | 20.78% |
| Autodesk Inc | 45.98 | 21.14 | 8.10 | 12.55% | $0.34 | $1.28 | 11.66% |
| Datadog Inc | 337.94 | 17.45 | 18.29 | 2.02% | $0.06 | $0.5 | 26.89% |
| Ansys Inc | 64.89 | 5.21 | 12.69 | 0.64% | $0.09 | $0.4 | -8.41% |
| AppLovin Corp | 46.60 | 33.48 | 7.60 | 23.28% | $0.45 | $0.76 | 47.9% |
| PTC Inc | 73.01 | 7.10 | 9.35 | 3.98% | $0.21 | $0.49 | 11.23% |
| Tyler Technologies Inc | 109.29 | 6.77 | 10.38 | 1.82% | $0.11 | $0.22 | 8.58% |
| Zoom Video Communications Inc | 23.19 | 2.34 | 4.29 | 2.65% | $0.23 | $0.87 | 3.25% |
| Bentley Systems Inc | 46.94 | 16.32 | 13.49 | 7.74% | $0.12 | $0.28 | 7.43% |
| Manhattan Associates Inc | 73.96 | 58.15 | 14.71 | 20.78% | $0.06 | $0.14 | 15.18% |
| Dynatrace Inc | 89.98 | 6.90 | 9.79 | 1.93% | $0.04 | $0.31 | 21.11% |
| Average | 84.13 | 14.51 | 11.74 | 6.14% | $0.43 | $1.47 | 13.52% |
When analyzing Salesforce, the following trends become evident:
The stock's Price to Earnings ratio of 43.34 is lower than the industry average by 0.52x, suggesting potential value in the eyes of market participants.
The current Price to Book ratio of 3.91, which is 0.27x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
With a relatively low Price to Sales ratio of 6.63, which is 0.56x the industry average, the stock might be considered undervalued based on sales performance.
With a Return on Equity (ROE) of 2.57% that is 3.57% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.6 Billion, which is 6.05x above the industry average, implying stronger profitability and robust cash flow generation.
The company has higher gross profit of $6.97 Billion, which indicates 4.74x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company's revenue growth of 10.74% is significantly below the industry average of 13.52%. This suggests a potential struggle in generating increased sales volume.
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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.
In terms of the Debt-to-Equity ratio, Salesforce stands in comparison with its top 4 peers, leading to the following comparisons:
Compared to its top 4 peers, Salesforce has a stronger financial position indicated by its lower debt-to-equity ratio of 0.21.
This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
The low P/E, P/B, and P/S ratios suggest that Salesforce is undervalued compared to its peers in the Software industry. However, the low ROE indicates that the company is not generating strong returns on shareholder equity. On the other hand, the high EBITDA and gross profit figures indicate strong operational performance. The low revenue growth rate may be a concern for investors looking for high-growth opportunities in the sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: CRM
