In this article I am going to analyze Salesforce Inc. which its ticker (CRM) based in its earning per share and its (P/E) ratio to see how much its stock will worth in the 2027.
First, let see how does CRM’s EPS did in the past six year starting form 2017 in order to estimate its growth rate, as shown below:
As we can see from the above chart, CRM’s EPS was fluctuated and has now clear trend. Therefor I am going to use the sales and (P/S) ratio instead of using the EPS and (P/E) ratio.
As we can see from the above chart that CRM’s sales moved in uptrend from 2017 when it was 2.71 Billion until it reached to 7.84 Billion in year 2022 with growth rate is 23.7%.
Now that we have the growth rate of CRM’s sales in the last five years, we are going to use this growth rate to estimate what will its sales be in 2027 ,which is five years from now by applying the following formula:
FV=PV(1+i)n
- Where
- PV = CRM sales in year 2022 = 7.84 billion.
- i = growth rate of CRM sales estimated above = 23.7%
- n = years of investment = 5 years in 2027
By substitute the numbers estimated early in the above formula, I end up with Salesforce Inc’s sales in year 2027 equal to 22.71 Billion.
Now, I have to see what was (P/S) ratio that CRM did have in the last six years, which as shown below:
Now we can estimate two scenarios for CRM stock price which is Bull market and the bear market.
For Bull market, I am going to take the highest (P/S) ratio which was 11.47 in year 2021, to see what will be the price of CRM stock in 2027:
Bull market CRM Stock’s price in 2027= (11.47)*(22.71$) = 260.48$.
For Bear market, I will take the lowest (P/S) ratio which was 5.34 in year 2022, to see what will be the price of CRM stock in 2027.
Bear market CRM Stock’s price in 2027= (5.34)*(22.71$) = 121.3$.
As of writing this article, Salesforce Inc. stock price is 149.6$ which is above bear scenario estimated above and below the bull scenario. Therefore, I am going to wait for the stock to drop and come to its bear scenario estimated value and then invest in it.
Leave a Reply