Salesforce.com Just Looks Too Rich

I have to say I am done with Salesforce.com (CRM). I know Jim C. loves this stock, but even for all its strength, I still can't get past the valuation. I understand the company is doing well in non-GAAP terms, but I have to wonder when it will actually show a profit in terms of GAAP.

The expense of stock options seems off the charts with this name. I don't know if I've ever seen a company this "mature" continue to dilute through stock option grants. Growth rates are strong, in the upper 20%s to mid-30% range, but that still puts us in a triple-digit non-GAAP P/E range. The subscription-based model is nice, since the revenue is easily seen going forward, and estimates should be made in a fairly accurate manner. Analysts continue to love this, and $165 seems to be the common target, so between that push and a little squeeze of the 10% short in the name, CRM quickly reversed off the overnight lows to push back to flat on the day....398 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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