Is Salesforce Stock Worth Owning Ahead of Q4 Earnings Release?

Salesforce CRM is scheduled to release fourth-quarter fiscal 2026 results on Feb. 25.

For the fiscal fourth quarter, the company expects total revenues between $11.13 billion and $11.23 billion (midpoint at $11.18 billion). The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $11.17 billion, which indicates an increase of 11.7% from the year-ago quarter’s reported figure.

CRM anticipates non-GAAP earnings per share in the band of $3.02-$3.04 for the fourth quarter. The consensus mark for non-GAAP earnings has remained unchanged at $3.03 over the past 60 days, which indicates a 9% increase from the year-ago quarter’s level.

Salesforce’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.9%.

Earnings Whispers for Salesforce

Our proven model does not conclusively predict an earnings beat for Salesforce this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Though Salesforce carries a Zacks Rank #2, it has an Earnings ESP of -0.05%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Factors Likely to Influence Salesforce’s Q4 Results

Salesforce appears well-positioned to report strong fourth-quarter results, driven by its strategic focus on digital transformation and cloud solutions. With businesses globally undergoing digital overhauls, Salesforce's commitment to aligning its product offerings with customer needs is likely to have boosted its revenues for the quarter.

The growing demand for generative AI-enabled cloud solutions has been a major catalyst for Salesforce. By embedding generative AI tools across its products, the company not only enhances customer engagement but also strengthens its competitive position in the customer relationship management space. This forward-thinking approach might have significantly contributed to its top-line growth during the to-be-reported quarter.

Salesforce’s ability to deepen relationships with leading brands across industries and expand its reach in key geographic markets remains a cornerstone of its growth strategy. The company’s increasing footprint in the public sector is likely to have provided a further boost, unlocking new growth opportunities during the third quarter.

The acquisitions of Waii, Convergence.ai and Zoomin have been pivotal in enhancing Salesforce's capabilities and diversifying its revenue base. These additions are likely to have driven higher subscription revenues, particularly across its core cloud services. Salesforce’s key cloud offerings, including Sales, Service, Platform & Other, Marketing & Commerce and Data, are expected to have delivered robust growth.

The ongoing cost restructuring initiative is likely to have boosted Salesforce’s profitability in the fourth quarter. The company’s third-quarter fiscal 2026 non-GAAP operating margin expanded 240 basis points to 35.5%, mainly driven by the benefits of cost restructuring initiatives, which include the trimming of the workforce and a reduction in office spaces.

CRM’s Stock Price Performance & Valuation

Over the past year, Salesforce’s shares have plunged 40.2%, underperforming the Zacks Computer – Software industry’s decline of 11.3%. Compared to its peers, CRM stock has also underperformed other enterprise software makers, including Microsoft MSFT, Oracle ORCL and SAP SE SAP. Over the past year, shares of Microsoft, Oracle and SAP have declined 2.4%, 6.7% and 29.2%, respectively.

Salesforce One-Year Price Return Performance

Now, let’s look at the value Salesforce offers investors at the current levels. CRM stock is trading at a discount with a forward 12-month P/E of 14.17X compared with the industry’s 27.7X.

Salesforce Forward 12-Month P/E Ratio

CRM stock also trades at a discounted multiple compared with SAP, Microsoft and Oracle. At present, SAP, Microsoft and Oracle have P/E multiples of 23.65, 22.09 and 19.73, respectively.

Investment Thesis for Salesforce Stock

Salesforce has long held the top position in the customer relationship management market, according to Gartner. The company’s vision now goes beyond customer management, and it is building a broader ecosystem focused on AI, data and collaboration. Acquisitions such as Waii, Bluebirds, Informatica and Slack highlight Salesforce’s push to evolve into a more comprehensive enterprise platform.

Salesforce’s AI initiatives further cement its leadership. Since introducing Einstein GPT in March 2023, the company has expanded its AI-driven functionalities across its entire ecosystem. This technology enhances automation, streamlines workflows and improves customer interactions, giving Salesforce a significant advantage as AI adoption accelerates across industries.

Its latest innovation, Agentforce, is gaining momentum. Combined with Data Cloud, these AI-driven offerings brought in $1.4 billion in recurring revenues in the third quarter of fiscal 2026, representing a 114% year-over-year increase. Agentforce alone generated $540 million in recurring revenues, up 330% year over year. More than 50% of Agentforce deals came from existing clients, showing Salesforce’s success in cross-selling AI features to its user base.

Final Thought: Buy CRM Stock Ahead of Q4 Results

The company’s leadership in customer relationship management and aggressive AI expansion creates a solid foundation for sustained growth. Its ability to deliver earnings growth despite ongoing macroeconomic uncertainties makes the stock worth buying. A lower valuation multiple than the industry also suggests that Salesforce is a solid investment option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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