When a quality stock is down 50% in six months, it doesn’t need to report a great quarter for the stock to bounce and that’s exactly what we’re seeing this afternoon with Salesforce (CRM).
The quarter has some nuance to it so let’s dive in. First, CRM lowered full year revenue guidance from $32.0-$32.1 billion to to $31.7-$31.8 billion. I think that’s why the initial reaction from the computers was down. However, they increased their EPS guidance to $4.74-$4.76 from $4.62-$4.64. What gives? They raised their operating margin guidance from 20% to 20.4%. So even though the top line will be lower, more of it will be flowing to the bottom line.
Shares are currently +6% in the after hours and could set the tone for Wednesday’s session.