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Earnings Preview: Salesforce.com

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Salesforce.com (NYSE:CRM) unveils its next round of earnings this Thursday, February 25. Here is Benzinga's everything-that-matters guide for the earnings announcement.

Net Income, Earnings, And Earnings Per Share

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Based on management's projections, Salesforce.com analysts model for earnings of $0.75 per share on sales of $5.68 billion. Salesforce.com reported a profit of $0.66 per share when it published results during the same quarter last year. Sales in that period totaled $4.85 billion.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the "consensus estimates"; these consensus estimates can have a significant effect on a company's performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an "earnings surprise", which can really move a stock depending on the difference between actual and estimated values.

See also: How to Buy Salesforce.com (CRM) Stock

If the company were to post earnings in line with the consensus estimate when it reports Thursday, EPS would be up 13.64%. Revenue would be up 17.09% from the same quarter last year. Here is how the company's reported EPS has stacked up against analyst estimates in the past:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020
EPS Estimate 0.75 0.67 0.69 0.55
EPS Actual 1.74 1.44 0.70 0.66
Revenue Estimate 5.25 B 4.90 B 4.85 B 4.75 B
Revenue Actual 5.42 B 5.15 B 4.87 B 4.85 B

Stock Performance

Shares of Salesforce.com were trading at $235.96 as of February 23. Over the last 52-week period, shares are up 36.78%. Given that these returns are generally positive, long-term shareholders should be content going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Salesforce.com is scheduled to hold the call at 17:00:00 ET and can be accessed here.

 

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Posted-In: BZI-EPEarnings