Salesforce Pre-earnings Analysis
Chart done on hourly timeframe. Salesforce investors have an enjoyed a tremendous return on their investment over the last 12 months, but the company will face a test today after-hours when it releases its quarterly earnings report. The company has delivered strong numbers and surpassed analysts’ estimates consistently, but growth has tapered over the past three quarters. This quarter’s earnings per shares (EPS) is estimated to reflect a reading of 1.82, only slightly above last quarter’s 1.78, but still shows 58% earnings growth compared to same quarter last year. Although profits have grown, CRM’s price to earnings ratio of 65 is still far above the healthy reading range of 15-25. This means the company’s stock will likely face a correction to adjust it to a more reasonable market cap, or they could avoid that by raising profit margins. Salesforce did a great job in 2023 of posting their biggest year in seven years at 4.14B profits, but prior to that it had struggled to keep consistent profits. With that being said, profits will be in full focus again this quarter and Salesforce ability to deliver on those expectations will set the tone for them for the next few months.
Option chain analysis:
CRM’s option chain expiring on June 21 2024 currently reflects an implied volatility reading of 43%, which translates to about a $22 move from the underlying stock between now and then. The direction of that move will depend on their earnings outcome and call.