Buy Salesforce (CRM) Stock Now Despite Post-Earnings & Dow Rally?

Quick Look Back…

Salesforce joined the Dow Jones Industrial Average last month, as part of a shake up after Apple’s AAPL 4-for-1 stock split. The cloud software firm is now part of a select group of giants from Microsoft MSFT to Disney DIS and could benefit from the added exposure.

More importantly, the firm’s second quarter results impressed investors and its improved outlooked helped showcase that its business is prepared to thrive in the digital age.

CRM’s Q2 FY21 revenue climbed 29%, while its adjusted earnings soared roughly 120% to crush our Zacks estimate. “As we look out over the next 12 to 24 months, we realize it’s important for us to make a strategic shift in investments today to better position our company for continued growth and customer success in this new, all-digital, work-from-anywhere environment,” President and CFO Mark Hawkins (NASDAQ:HWKN) said on the company’s Q2 earnings call.

What’s Next…

Salesforce is one of the world’s largest enterprise-application-software companies. The firm’s cloud-based customer relationship management services offer clients a range of tools and applications to help run everything from sales and e-commerce to marketing and analytics.

CRM’s subscription-based cloud software offerings were already growing widely popular with businesses of all shapes and sizes for years. And the work-remote push solidified its business model. On top of that, its Tableau acquisition, which it completed in August 2019, is set to boost its data analytics segment.

That said, the company’s sales growth is expected to slow. Our current Zacks estimates call for Salesforce’s fiscal 2021 (current year) revenue to climb 21.5% to reach $20.77 billion, with FY22 projected to come in another 17.4% higher to $24.39 billion.

Salesforce’s FY21 growth estimate would mark its slowest top-line growth since 2010, with FY22’s projection representing its most subdued revenue growth as a public firm. For reference, CRM’s FY20 sales jumped 29%,

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