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Salesforce: More On Non-GAAP Fun and Games

Since June 5, when we last called into question the nutty valuation of Salesforce.com (CRM), the dubious nature of its latest acquisition, and the company’s general love of non-GAAP accounting, its shares are up a stunning 11%, as seen in a stock chart.

CRM Chart

CRM data by YCharts

As we said in that earlier article, shorting Salesforce.com has produced only misery in recent years and owning it has been sublime. Nothing goes up forever, however, and understanding the accounting issues – the stock seems to trade almost solely on revenue growth; enormous stock-based compensation costs are excluded from non-GAAP results; so are amortization of significant amounts of intangible assets – would seem wise for those already in the stock and those considering hopping aboard.

CRM Chart

CRM data by YCharts

Don’t just take our word for it. Read also a fine Barron’s article on tech companies and non-GAAP reporting.

Other companies reporting non-GAAP results so that investors won’t focus on stock-based compensation, the costs of which are a real bummer, include Amazon (AMZN), Broadcom (BRCM), Concur Technologies (CNQR) and Facebook (FB). The PE ratios of these stocks are so fanciful, we’ll spare you the chart. Price-to-sale ratios are very rich, too.

CRM Price / Sales Ratio TTM Chart

CRM Price / Sales Ratio TTM data by YCharts

Salesforce.com and some others turn earnings season into silly season.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com. You can also request a demonstration of YCharts Platinum.

Read more articles about: Company Analysis  salesforce   tech stocks   

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