For all those who do not know Salesforce (CRM.US), it is an American company of software on demand, for the management of human capital and the clients of companies through its CRM program called Sales Cloud. In addition to this solution, the company has other products focused on customer service, marketing, artificial intelligence, community management, application creation, among other fronts. Salesforce solutions are suitable for SMEs and also for large corporations.
According to the latest data from IDC, the multinational founded by Marc Benioff holds 19.8% of the market. With that percentage, Salesforce has more of the pie than its four immediate rivals combined (Oracle 5.3%, SAP 4.8%, Adobe 3.9% and Microsoft 3.8%).
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In this context, we are talking about a company with growth characteristics, within the technology sector and that has demonstrated a consistency in the year-on-year growth of its income on average in the last 10 years of 29.1%, and under the same criteria its earnings per share stood at 5.4% as we can see in the table below.
Although there have been better periods, mainly prior to the GFC, with quarterly growth (YoY) of over 60% when the field of CRM management was booming and the North American company emerged as the market leader. After the financial crisis of 2008, the quarterly growth (YoY) has remained stable between 20% and 35%. In the table below we can see the growth variations of the company's turnover during the last 14 years.
While the dynamic growth remains in an exponential trend both quarterly and accumulated annually.
And although the numbers are good, recent events have been damaging the stock market evolution of the company that is currently immersed in a corrective process, since it will reach the maximums above $ 280 per share and the recent minimums in the surroundings of the $ 200 per share. The key support broken in recent days at $ 215 per share right now is a resistance that you will need to bridge to maintain the local structure and seek trading levels above $ 230. If this overbalance structure 1:1 projects us a theoretical price close to those levels as long as it is possible to break the barrier of the previous key support now converted into resistance.
Source: xStation
Existing pressure from rising yields on US debt coupled with fears of rising inflation could further correct the US tech sector. Especially after whatching that the Fed's predictions project a growth for 2021 of the North American economy of 6.5% while inflation will not recover levels close to 1.5-2%.
This macroeconomic pressure for an unrealistic projection exerts a negative weight on the technology sector and could harm in the medium term the evolution of the prices of growth companies such as Salesforce even though their fundamentals should continuously support all-time highs.
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