Salesforce.com's (CRM) fiscal third quarter was exceptional - with accelerating organic growth (billings +23%, compared to +14% consensus, and nominal growth of +27% vs. +19% consensus). Revenues had a modest beat and non-GAAP EPS was +$0.11 better than consensus.
Demand strength was broad-based (geographically and across all clouds). The financial space was the source of better than expected results.
The guidance implied 4Q billings growth of a bit more than +15% as compares grow more difficult and foreign exchange headwinds are strong.
Fiscal year 2020 guidance rises to +20.5% compared to consensus forecasts of +19.5%.
The shares are trading +$7/share in early trading Wednesday - bringing its market capitalization to over $100 billion.
The principal risks to the shares are a downturn in IT spending, execution challenges and acquisition integration risks.
It is not my style to chase a stock like Salesforce. As a "value investor," I typically only purchase high octane stocks like this after a fall. (Facebook (FB) is a good example of this strategy that I have recently employed).
Though last night's overall results were superb, I have no strong current investment view on Salesforce.
Street targets lie in the $175 area - well above the current price of $135/share.
Over the last five years Salesforce's EPS have compounded at a +45% rate of growth. That spectacular curve will slowdown in the five years ahead - to probably +30% (at best).
With over 35 analysts covering the shares - it is not as if the company has "not been discovered."
So, its hard (at least for me) to develop an "edge" (or variant view) in this name.
(An earlier version of this commentary originally appeared on Real Money Pro at 8:30 a.m. ET on November 28. Click here to learn about this dynamic market information service for active traders and to receive Doug Kass's Daily Diary and columns from Paul Price, Bret Jensen and others.)