GuruFocus News
10/26/2026 06:27
On October 26, 2026, we delve into the DCF analysis for Salesforce Inc CRM, a company currently priced at $248.57. Over the past year, Salesforce has experienced a slight decline of 1.7%, with a year-to-date drop of 5.5%. However, in the short term, the stock has shown some recovery with a 3.3% increase over the past week and a 4.6% increase over the past month.
- DCF Earnings-based intrinsic value suggests a fair value of $261.00, indicating a margin of safety of 4.8% compared to the current price.
- DCF Free Cash Flow (FCF)-based intrinsic value stands at $525.44, suggesting a significantly undervalued status with a margin of safety of 52.7%.
- The GF Score™ of 93/100 indicates strong performance metrics, but the low predictability rank of 2/5 stars raises concerns about the reliability of the DCF inputs.
What Is CRM Worth? DCF Earnings-Based Model
The DCF earnings-based model for Salesforce Inc utilizes a two-stage approach to estimate the intrinsic value of the stock. The first stage considers the growth phase over the next ten years, where the earnings per share (EPS) is expected to grow at a rate of 0.0%. The second stage accounts for a terminal growth rate of 4% for the following ten years.
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $8.35 |
| 10-Year Growth Rate | 0.0% |
| 10-Year Treasury Rate | 4.99% |
| Discount Rate (ceil(Treasury) + 6%) | 11% |
| Terminal Growth Rate | 4% |
The calculation summary for the two-stage model is as follows:
| Stage | Description | Value |
|---|---|---|
| Growth Stage (Years 1-10) | EPS growing at 0.0%, discounted at 11% | $183.12 |
| Terminal Stage (Years 11-20) | 4% terminal growth, discounted at 11% | $77.88 |
| Intrinsic Value | Growth + Terminal | $261.00 |
Comparing the current price of $248.57 with the intrinsic value of $261.00 suggests that Salesforce is fairly valued, with a margin of safety of 4.8%. It is noteworthy that GuruFocus utilizes EPS excluding non-recurring items, as research indicates that stock prices correlate more closely with earnings than with free cash flow. For further details, visit the CRM DCF Calculator.
What Does the Free Cash Flow DCF Say?
The free cash flow (FCF)-based intrinsic value for Salesforce is calculated at $525.44, which presents a stark contrast to the earnings-based valuation. This significant difference indicates that while the earnings DCF suggests the stock is fairly valued, the FCF DCF points to a substantially undervalued status with a margin of safety of 52.7%.
How Does GF Value™ Compare to the DCF Models?
The GF Value™ for Salesforce Inc is calculated at $353.35, providing a third perspective on the stock’s valuation. GF Value™ is a proprietary measure developed by GuruFocus, derived from historical trading multiples, past business growth, and future performance estimates. The divergence between the three models—earnings DCF, FCF DCF, and GF Value™—highlights the uncertainty surrounding the stock’s valuation. For more insights, check the GF Value™.
What Does CRM’s GF Score™ Tell Us?
The GF Score™ evaluates a company’s performance across various metrics, providing a holistic view of its financial health. Salesforce’s GF Score™ of 93/100 indicates strong fundamentals, but the low predictability rank of 2/5 stars suggests that the DCF model may be less reliable for this stock. The following table summarizes key performance metrics:
| Metric | Rating |
|---|---|
| GF Score™ | 93/100 |
| Financial Strength | 5/10 |
| Profitability | 8/10 |
| Growth | 10/10 |
| Valuation | 8/10 |
| Momentum | 10/10 |
Given the low predictability rank, the DCF model’s reliability for Salesforce is questionable. For more information, visit the CRM stock page.
Key Assumptions and Limitations
It is important to note that DCF models are highly sensitive to assumptions regarding growth rates and discount rates. Stocks with lower predictability ratings, such as Salesforce, tend to yield less reliable DCF estimates. Additionally, the terminal growth rate of 4% is a simplifying assumption that may not accurately reflect future conditions.
What This Means for Investors
In synthesizing the three valuation models—earnings DCF, FCF DCF, and GF Value™—we observe a clear tension. The earnings DCF suggests Salesforce is fairly valued, while the FCF DCF indicates significant undervaluation. The GF Value™ aligns more closely with the FCF DCF, suggesting a stronger potential upside. Furthermore, the guru ownership signal shows that 19 gurus currently hold the stock, with 9 adding and 9 trimming their positions, while insiders have been net selling over the past year. This mixed signal may warrant caution for investors. For a deeper dive into the valuation, explore the CRM DCF Calculator.
Frequently Asked Questions
What is CRM’s intrinsic value based on DCF?
According to the analysis, the earnings-based intrinsic value is $261.00, while the FCF-based intrinsic value is $525.44.
Is CRM overvalued or undervalued?
The earnings DCF suggests CRM is fairly valued, while the FCF DCF indicates it is significantly undervalued.
How reliable is the DCF model for CRM?
Given its predictability rank of 2/5 stars, the DCF model’s reliability for CRM is considered low.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Disclosures
I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.
