Is Salesforce an Outperform?

With shares of Salesforce.com (NYSE:CRM) trading at around $174.46, is CRM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Salesforce is an interesting story. The most interesting aspect of this story has been stock performance. Other than the financial crisis of 2007-2009, this stock has been a freight train. For years, many people have claimed that the stock is too expensive. Right now, the forward P/E is currently 89.47. With unimpressive margins, inconsistency on the bottom line on an annual basis, and many unprofitable quarters in a row, is it possible that these people are correct?

Salesforce provides cloud computing and social enterprise solutions to various businesses and industries worldwide. It has been a Wall Street darling since its IPO (for the most part). Despite not offering consistent profits, Salesforce has beat expectations for three consecutive quarters. Furthermore, many top investors, including George Soros, are big fans of the company.

The tug of war taking place here is between excellent revenue growth and poor valuation.

Let’s take a look at some important numbers prior to forming an opinion on this stock…