Salesforce Surges Post Earnings: ETFs to Benefit

Salesforce CRM stock soared about 12% during the key trading session on Thursday following the enterprise cloud computing solution provider’s reporting of better-than-expected financial results for the fourth quarter of fiscal 2023. The company’s upbeat guidance for the first quarter of fiscal 2024 also boosted investors’ confidence in the stock.

If this was not enough, the company announced an increase in its share repurchase authorization to $20 billion. The company is eyeing to improve efficiency and reduce cost of sales, marketing, and G&A. The stock had its best day since 2020 on Mar 2, per CNBC.

Inside Earnings

Salesforce’s fourth-quarter fiscal 2023 non-GAAP earnings doubled to $1.68 per share from the 84 cents reported in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.36. Salesforce’s quarterly revenues of $8.38 billion climbed 14% year over year, surpassing the Zacks Consensus Estimate of $7.99 billion. The top line also improved 17% in constant currency.

Strong Guidance for Q1 and FY24

For the fiscal first quarter, Salesforce projects total sales between $8.16 billion and $8.18 billion (midpoint $8.17 billion), which is higher than the Zacks Consensus Estimate of $8.09 billion at the midpoint.

Furthermore, CRM anticipates non-GAAP earnings per share in the band of $1.60-$1.61 for the current quarter, which is way higher than the consensus mark of $1.30.

For fiscal 2024, Salesforce forecasts revenues in the range of $34.5-$34.7 billion, which is more than the Zacks Consensus Estimate of $34.09 billion. The company projects fiscal 2024 non-GAAP earnings between $7.12 and $7.14 per share, which is higher than the consensus mark of $5.83 per share.

Other Initiatives

Alongside the earnings report, Salesforce said it’s working with Bain on a business review, and the company announced the removal of the board’s committee on mergers and acquisitions. That earned praise from prominent activist Elliott Management, which announced a stake in the company in January, per CNBC.

Upbeat Zacks Rank

The stock has a Zacks Rank #2 (Buy). The stock hails from the Zacks Industry that falls into the top 42% segment. Its Zacks Sector Rank too falls into the top 44% segment.

Against this backdrop, below we highlight a few ETF that are heavy on Salesforce and may benefit from the spike in its share price.

ETFs in Focus

iShares Expanded Tech-Software Sector ETF IGV9.60% Weight of Salesforce; Zacks Rank #1 (Strong Buy)

The underlying S&P North American Expanded Technology Software Index comprises of North American equities in the software industry and select North American equities from interactive home entertainment and interactive media and services industries. The fund charges 40 bps in fees. Salesforce takes the top spot in the fund with about 9.6% weight.

First Trust Dow Jones Internet ETF FDN – 5.27% Weight; Zacks Rank #2 (Buy)

The underlying Dow Jones Internet Composite Index includes only companies whose primary focus is Internet-related. The fund charges 51 bps in fees. Salesforce, Inc. takes the third spot in the fund with about 5.51% exposure.

Fidelity Cloud Computing ETF FCLD – 5.27% Weight

The underlying Fidelity Cloud Computing Index reflects the performance of a global universe of companies across the market capitalization spectrum that provide products or services enabling the increased adoption of cloud computing, characterized by the delivery of computing services over the internet. The fund charges 39 bps in fees. Salesforce, Inc. takes the first place in the fund with about 4.47% focus.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Salesforce Inc. (CRM) : Free Stock Analysis Report

First Trust Dow Jones Internet ETF (FDN): ETF Research Reports

iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports

Fidelity Cloud Computing ETF (FCLD): ETF Research Reports

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.