salesforce.com, inc. (CRM) Living Up to its Name?

The software firm’s spectacular top-line growth has prompted many investors to get in on the stock, which has propelled its valuation to rather lofty multiples. The stock now has a forward P/E of about 71, although with an expected three-to-five-year EPS growth rate of around 52%, one can see why the market has such high hopes of the stock.

The firm’s quarterly revenue growth of 35% dwarfs Oracle’s 3% and SAP’s 12%, although the stock is considerably more expensive looking at forward P/E,  price to sales, and its five-year expected PEG ratio. The question is whether the company’s growth will be able to keep up with these steep metrics.

The bottom line

Salesforce delivered another excellent quarter of top-line growth, with sales increasing handsomely year-on-year. On the other hand, the bottom-line performance was somewhat disappointing. Still, the company is one of the fastest growing names in the sector and appears to be able to sustain this trend.

While valuations may be getting a bit high compared to that of the competition, nobody in the cloud space seems to be generating the kind of growth that Salesforce does. In terms of sales, the company does indeed appear to be living up to its name.

The article Salesforce Living Up to its Name? originally appeared on Fool.com and is written by Daniel James.

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