This Dow stock is soaring after hours Tuesday

Markets were generally downbeat for much of the day.

| More on:
Person pointing at an increasing blue graph which represents a rising share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Market participants had hoped that the rally from last week would be able to continue into the last trading day of May, but unfortunately, the stock market gave back some of its gains. Losses for the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) were relatively small at roughly half a percent, but it still came as somewhat of a blow to investor confidence to see a lack of follow-through from prior big gains.

Index Daily Percentage Change Daily Point Change
Dow (0.67%) (223)
S&P 500 (0.63%) (26)
Nasdaq (0.41%) (50)

Data source: Yahoo! Finance.

However, there was some good news after the closing bell. Shares of Salesforce (NYSE: CRM) rose sharply in after-hours trading, as the blue chip software-as-a-service company reported its latest financial results. After seeing so many stocks lose ground despite strong business results in their quarterly reports, investors were happy to see Salesforce climbing, even as it faces some of the same challenges as companies across the tech industry.

What Salesforce said

Salesforce's quarterly results for the period ending April 30 included a lot of good news. Revenue of $7.41 billion was up 24% year over year. Subscription and support revenue rose at the same 24% annual rate, but gains for the much smaller professional services segment of 30% helped juice up Salesforce's top line slightly. Remaining performance obligations were 20% higher than year-ago levels at about $42 billion, about half of which consists of current obligations. 

Investors were also pleased with Salesforce's bottom-line performance, even though it reflected some of the company's challenges. Adjusted net income came in at $982 million, which was down from $1.14 billion in the year-earlier quarter. However, the resulting adjusted earnings of $0.98 per share still were better than most investors had feared the customer relationship software specialist would generate.

Salesforce attributed the solid performance to a couple of things. First, the company has worked hard to build a durable business model that can handle ups and downs in the business cycle. Also, the portfolio of products that Salesforce gives its clients is broad enough to address the needs of businesses across just about every industry, and smart internal corporate decisions have also made Salesforce more efficient operationally.

Will the rest of the year look better for Salesforce?

Salesforce had generally positive things to say about how the near-term future is likely to look. In the fiscal second quarter ending in July, the CRM specialist expects sales of $7.69 billion to $7.7 billion, which would be up about 21% from year-earlier levels. Adjusted earnings should rise slightly to between $1.01 and $1.02 per share, with roughly 15% expected gains in current remaining performance obligations.

For the full year, Salesforce has similar expectations. It projected revenue of $31.7 billion to $31.8 billion, up 20% from fiscal 2022. Adjusted operating margin should top 20%, and Salesforce is hoping to see adjusted earnings of $4.74 to $4.76 per share and a 21% to 22% rise in operating cash flow.          

Interestingly, Salesforce's full-year projections were changed in mixed ways. The earnings call was about $0.12 per-share higher than previously forecast. However, Salesforce reduced its sales estimate by roughly $300 million from its previous forecast of $32 billion to $32.1 billion.

Salesforce had come into its earnings report as one of the worst performers in the Dow in 2022. However, it now appears some investors see it as a good candidate for a bounce. If it can maintain its upward momentum, Salesforce has a lot of things going for it. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Salesforce.com. The Motley Fool Australia has recommended Salesforce.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
International Stock News

5 proven investment strategies you can use to ride out a recession

Turn an economic crisis into opportunity with these investing strategies.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
International Stock News

Think you can’t afford to buy Tesla shares? Think again…

Tesla will be splitting its stock... again. Here's what we know.

Read more »

A young couple in the back of a convertible car each raise a single arm in the air whilst enjoying a drive along the road
International Stock News

Why Tesla and other EV stocks rocketed higher in July

Tesla surprised investors with better-than-expected second-quarter results.

Read more »

A man with a scrappy beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.
International Stock News

5 tech stocks sending the Nasdaq higher on Wednesday

A combination of solid earnings and investor optimism has many of the year's losers seeing some gains.

Read more »

A woman in colourful outfit holds up a phone to take a selfie.
International Stock News

Why Apple stock popped today

The iPhone maker has its eye on another revenue stream.

Read more »

Happy woman on her phone while her electric vehicle charges.
International Stock News

Why Tesla shares bounced ahead of its stock-split vote

The market will find out Thursday if shareholders have approved the electric vehicle company's 3-for-1 stock split.

Read more »

A family of three sit on the sofa while watching television.
International Stock News

Netflix shares rose 29% last month, but the stock is still cheap

Here's why Netflix gained nearly 30% last month, and why the stock still has room to run much higher.

Read more »

a graph indicating escalating results
International Stock News

Why did the Nasdaq share price rocket 19% in July?

The financial stock surged on strong earnings, among other factors.

Read more »