Salesforce Rallies After Quarterly Report Beats Analyst Estimates

Key Insights

• Salesforce reported fiscal Q1 2023 results, easily beating analyst estimates on both earnings and revenue. 
• The company’s business stays strong despite headwinds and its guidance for the next quarter implies continued growth. 
• Salesforce remains richly valued at 31 forward P/E, so traders will need to monitor the general market sentiment towards higher-PE stocks.

Salesforce Rebounds As Traders Focus On Optimistic Guidance

Shares of Salesforce gained strong upside momentum after the company released its fiscal first-quarter report. Salesforce reported revenue of $7.41 billion and adjusted earnings of $0.98 per share, beating analyst estimates on both earnings and revenue.

In the next quarter, Salesforce expects to report revenue of $7.69 billion – $7.70 billion and adjusted earnings of $1.01 – $1.02 per share.

Traders reacted to the strong quarterly report and optimistic guidance for the next quarter, sending Salesforce stock to multi-week highs. It should be noted that Salesforce stock has declined from all-time highs near the $310 level to the recent lows near $155, so market’s expectations were low ahead of the report.

What’s Next For Salesforce Stock?

Analysts expect that Salesforce will report earnings of $4.65 per share in the current fiscal year and $5.76 per share in the next fiscal year, so the stock is trading at 31 forward P/E.

This is not cheap, but traders should keep in mind that the stock has previously traded at higher multiples. In addition, it should be noted that analyst estimates have been mostly stable in recent months, while the stock was moving lower.

The first-quarter report exceeded analyst expectations, but the strength of Salesforce’s stock price rebound will likely depend on general market sentiment. The company remains richly valued despite the huge pullback in recent months. In this light, the key question is whether the current optimism towards higher-PE stocks will remain intact in the upcoming weeks.

To keep up with the latest earnings updates, visit our earnings calendar.