Salesforce’s GAAP earnings per share compounded at 183.7% annually over the past three years, far outpacing its 10.0% revenue CAGR despite the stock’s 41% drop over the last year.
Operating margin drove much of that gap, rising from 9.2% three years ago to 18.4% two years ago and 20.5% a year ago as the company became markedly more profitable.
An 11.4% reduction in shares outstanding over three years further boosted per-share earnings, with buybacks spreading profit across fewer shares.
That earnings profile challenges the market’s focus on slowing top-line growth, especially with Salesforce trading at a 3.2 price-to-sales multiple that sits below its historical average.
The key question now is whether margin expansion can continue, because that may matter more to future EPS growth than any near-term rebound in sales.