In a buoyant, bullish stock market, it’s been pretty strange to watch how the tech-heavy Nasdaq Composite Index has underperformed the Dow Jones Industrial Average (INDEXDJX:.DJI) by more than a full percentage point since the year began. One tech stock in particular that’s been failing to pull its weight is salesforce.com, inc. (NYSE:CRM) , whose stock has lost a percentage point’s worth of market cap since early January. But why?
Salesforce stock is all bark …
When you stack up salesforce.com, inc. (NYSE:CRM) stock against two of its larger, incumbent rivals in database software — SAP AG (NYSE:SAP) and Oracle Corporation (NASDAQ:ORCL) — there’s plenty of reason to expect the former to outperform the latter. For example, according to the smart folks at finviz.com, who keep track of these kinds of things, Salesforce boasts a better record of sales growth than either of its rivals:
With a historical sales-growth rate more than twice that of Oracle Corporation (NASDAQ:ORCL), and more than three times SAP AG (NYSE:SAP)’s plodding pace of 9.6% growth, salesforce.com, inc. (NYSE:CRM) stock should be running away from its rivals. And it is … sort of. Both Oracle and SAP shares are down more than Salesforce since the year began, so Salesforce is outperforming the competition — yet the stock’s still not growing by the leaps and bounds that you might expect a 32% growth rate to produce.
Salesforce stock is also expected to turn in stronger earnings growth than either SAP AG (NYSE:SAP) or Oracle Corporation (NASDAQ:ORCL) over the next five years:
Yet once again, despite its boasting both strong past performance and strong future prospects, investors continue to treat salesforce.com, inc. (NYSE:CRM) stock like a dog with fleas.