Good news everyone, Salesforce Inc. has officially lived up to it’s name this quarter as they’ve literally “forced sales” with their latest earnings report. In short, unlike our boys over at Nvidia, who literally bodybagged estimates, but failed on gross margin guidance (expectations were about as high as Willie Nelson on a Sunday)…

(Source: Giphy) 

Salesforce, the CRM company who also holds the OG ticker symbol of the same name ($CRM), put on a clinic yesterday with a stellar top-line, bottom-line, and guidance beat. Grand Slam baby. For instance, while analysts projected an EPS of $2.36, Salesforce handed analysts a nice $2.56 for a whopping +8.63% beat. 

(Source: Yahoo Finance) 

Revenue on the other hand came in with a +0.99% beat as Salesforce blew past analysts' $9.23 billion number with an impressive $9.32 billion in revenue. Looking over year over year, it’s even more phenomenal as revenue not only exploded +10.74% YoY…

But Salesforce’s net income, diluted EPS, and net profit margin all exploded by +670.35%, +680%, and +596.68%, respectively. Of course, all of these numbers were a major boost regarding the sentiment of the stock, but the massive increase in margins were key here. 

(Source: IBD) 

Especially considering that some analysts showed warning signs that a possible cut in Salesforce’s revenue was bound to happen. However, with an uptick in revenue, including the nice margin achievement, it’s clear the company has been able to solidify its strength within its subscription and support sales (up +9% YoY, at a nice $8.76 billion in revenue) amidst a woeful software industry. 

(Source: Investopedia) 

In fact, CFO Amy Weaver (who is also stepping down) pretty much hit the nail on the head for investors as she stated, “"We continue to deliver disciplined, profitable growth, and this quarter, operating margins closed at record highs, with GAAP operating margin of 19.1%,". Not surprisingly, once the news was out, the stock catapulted to a peak of +6.13% during after market hours - with momentum ultimately stalling throughout today’s session as the stock erased its post earning gains.

However, with that said, Salesforce is still up an attractive +21.25% over the past 12 months, which is why after returning $10 billion to shareholders in the form of stock buybacks, along with $400 million from dividends, analysts are still giving the software giant some love. 

(Source: Seeking Alpha) 

For instance, both RBC Capital and Loop Capital Markets both raised their price targets on the stock to $300 and $305, which indicates a nice +15.65% and +17.57% potential upside for investors. 

(Source: Benzinga) 

But what about the guidance? Oh yeah, I almost forgot. According to Morningstar, Salesforce came in with a new outlook for full year adjusted operating margins at 32.8%, with a nice 23%-25% in operating cash flow.

Meanwhile, the revenue outlook for the third quarter is sitting between $9.31 billion to $9.36 billion, compared to the $9.40 billion that analysts were expecting. So clearly missing there, however the company did raise its full-year earnings guidance to a range of $10.03 - $10.11 per share where the estimates fell in around the $9.86-$9.94 range. 

(Source: Investing.com) 

Now for you fast paced technical regards out there (like myself), Salesforce is completely missing the boat on this one. Despite the fundamentals looking strong, the price action is screaming “get rekt” as 12 out of 17 indicators are flashing “Strong Sell”, while 10 out of 15 moving averages are showing more downtrend continuation. 

Which again, isn’t too surprising considering Salesforce closed -0.73% on the day, completely erasing the post earnings frenzy (as it’s down -1.70% over the past five days).

So with that said, what’s the takeaway here for investors? Well clearly, the company is growing at a steady pace as it’s nailing analysts up the head with impressive beats. However, with Salesforces' revenue guidance not matching the impressive EPS guidance, combined with the poor technicals - it’s a mixed bag for me.

(Source: Giphy) 

You see, I like certainty, and while there is absolutely no perfect scenario when it comes to investing, it’s better when most of the factors align with the goal. And right now, technicals are definitely not aligning with the fundamental growth. So for that reason, “I’m out”... for now anyway.

Now obviously, do what you will with that information, but please for the love of everything holy act accordingly. Remember, I’m only giving you the facts and the story here, so take what I say with a grain of salt. Because just like my old man always used to tell me, “If I ordered a truck full of dumba$$es and only got you, I’d definitely get my money's worth”.

So there you go, friends. As always, stay safe and stay frosty! Until next time… 

Stocks.News does not hold positions in companies mentioned in the article.