Salesforce is an American company, the developer of the No. 1 CRM system in the world, provided to customers using the SaaS model (business management in the cloud through a CRM system, for the use of which users pay regular payments).
Under the name Force.com the company provides a PaaS system (infrastructure and software prepared for application development) for the independent development of applications by the business, and under the brand Database.com – cloud database management system. Among the products acquired as a result of acquisitions there are the Heroku platform service, the MuleESB service bus, the replicated Tableau data visualization system, and the Slack corporate messenger.

The company was founded in 1999 and is headquartered in San Francisco, California.

At the first glance, we see that over the past 4 years, revenue has increased by 2 times, free cash flow has increased slightly less than 2 times. But net profit increased from $1.1 billion in 2019 to only $1.4 billion, and in 2020 it was $4 billion.

Multipliers:
P/E 142, forward P/E 45 (current average by competitors 51)
P/B 3.5 (industry average 10)
P/S 7.7 (industry average 11.4)
Debt of $14 billion with current operating cash flow of $6 billion
No dividends
Share Price: $192

The cash flow discounting model shows a fair price of $202.
Simply Wall Street values the company at $350.
28 analysts leading the company give an average estimate of $303.

So why is profit falling with revenue growing? The answer is in efficiency. In general, with the growth of revenue, the cost price should decrease, business efficiency should grow. Last year, the gross profit was 75%, and this year it is 73%. R&D and marketing costs have also increased. There are two things that are difficult for accountants to trick – revenue and operating cash flow. Both indicators are growing. And the profit jumps indicate some problems in the financial department of the company.

Technical picture:
Stocks are trading below the 20, 50 and 200 day moving averages. The exchange rate broke through the serious support of September 2020 – March 2021, which was at $ 205 and continued to fall. And the closer the price is to $180, the more it makes sense to increase the position.

Conclusion: just a few months ago, Salesforce was worth $309 per share, now it’s less than $200. A 38% drop due to not very good reports. That is, growth continues, business is growing, just not at the pace expected in the market. What is the downside potential of a growing company that has already fallen by more than a third?
By all indicators, Salesforce is better than its competitors in the industry, except for P/E (Salesforce has it equal to 100, the average is 51.6), moreover, Salesforce is the undisputed leader of its industry in terms of business size.