Salesforce.com Intrinsic Value Calculation – Salesforce Set to Maximize Profits Through Cost Reductions, Price Increases, and AI Technology
November 21, 2023
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SALESFORCE.COM ($NYSE:CRM): Monness, Crespi, Hardt, an independent research firm, recently suggested that Salesforce is in a strong position to maximize profits through cost reductions, price increases, and the incorporation of Artificial Intelligence (AI) technology. Salesforce is looking to reduce costs by shifting from a license-based model to a subscription-based model. This will allow them to reduce their expenses and offer customers more flexible pricing options.
Additionally, they are looking to increase prices in order to drive additional revenue and offset the costs of implementing AI technology. AI technology will help Salesforce reduce manual labor and increase efficiency, allowing them to run their operations more cost-effectively. The company is well-positioned to capitalize on the growth in the cloud computing and software industries, and if successful, could benefit significantly from these measures. As such, investors should keep an eye on the company’s progress in these areas as it moves forward.
Price History
This strategy was announced on Monday, along with the opening of SALESFORCE.COM stock at $221.4. After closing at $225.1, the company saw a 1.8% increase from the previous closing price of 221.2. The cost reduction plan includes cutting expenses on software, hardware, and labor while improving efficiency and productivity. Price increases are expected to improve gross margin by increasing the value of products and services sold.
The company is also investing in AI technology to improve customer service and internal operations. This strategy is expected to result in higher customer satisfaction, as well as higher profits for the company. With the implementation of these measures, the company is well-positioned to take advantage of the potential growth opportunities in the market. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Salesforce.com. More…
| Total Revenues | Net Income | Net Margin |
| 33.07k | 1.58k | 9.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Salesforce.com. More…
| Operations | Investing | Financing |
| 8.4k | 40 | -8.66k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Salesforce.com. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 92.45k | 34.37k | 59.63 |
Key Ratios Snapshot
Some of the financial key ratios for Salesforce.com are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 19.5% | 300.2% | 13.0% |
| FCF Margin | ROE | ROA |
| 22.9% | 4.6% | 2.9% |
Analysis – Salesforce.com Intrinsic Value Calculation
At GoodWhale, we recently completed an analysis of SALESFORCE.COM‘s fundamentals. After carefully evaluating its financials, we derived a fair value of $252.0 for the company’s stock using our proprietary Valuation Line. As of today, the stock is trading at $225.1 – a fair price, but one that is currently undervalued by 10.7%. We believe that now is a great time for investors to consider purchasing SALESFORCE.COM shares, for both short-term and long-term gains. More…
Peers
Salesforce Inc is a cloud-based customer relationship management software company. Founded in 1999, Salesforce provides software for customer relationship management, or CRM, to businesses of all sizes. In the CRM software market, Salesforce competes with Microsoft Corp, SAP SE, and Oracle Corp.
– Microsoft Corp ($NASDAQ:MSFT)
Microsoft Corporation is an American multinational technology company with a market cap of $1.78 trillion as of April 2021. Microsoft is a leading provider of productivity and business solutions, including the Microsoft Office suite of products, the Windows operating system, and the Azure cloud computing platform. The company also manufactures and sells consumer electronics, such as the Xbox gaming console and Surface tablet. Microsoft has a return on equity of 45.3% as of fiscal year 2020.
– SAP SE ($NYSE:SAP)
SAP SE is a German multinational software corporation that makes enterprise software to manage business operations and customer relations. The company has a market cap of 101.09B as of 2022 and a Return on Equity of 10.12%. SAP is the third largest software company in the world and the largest enterprise software company in Europe. The company was founded in 1972 and is headquartered in Walldorf, Germany. SAP has over 425,000 customers in over 180 countries. The company employs over 100,000 people.
– Oracle Corp ($NYSE:ORCL)
Oracle Corporation is an American multinational computer technology corporation, with a market cap of $180.72B as of 2022. They specialize in developing and marketing computer hardware systems and enterprise software products. Oracle’s Return on Equity for the year ending December 31, 2020 was -97.78%.
The company has been in business since 1977 and was founded by Larry Ellison, Bob Miner, and Ed Oates. Oracle is the second-largest software company in the world by revenue, after Microsoft. The company is also the largest provider of enterprise software systems.
Summary
Investment analysts at Monness, Crespi, Hardt (MCH) have recently stated that Salesforce.com is well-positioned to benefit from recent cost cuts, price hikes, and the implementation of artificial intelligence (AI) technology. According to MCH, the company is well-equipped to capitalize on these strategies and generate higher profits for shareholders. Salesforce has already demonstrated its ability to cut costs while simultaneously increasing its prices, and the addition of AI technology should enable the company to further streamline operations and improve customer experience.
MCH also believes that Salesforce will see substantial returns in the near future from its investment in AI, as it enables the company to identify customer needs and provide better solutions for their problems. This analysis highlights Salesforce’s potential, and investors are encouraged to consider the company as a lucrative long-term investment option.
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