CRM Looks 26.4% Undervalued on GF Value™ Amid Strong Public Sector Growth
GuruFocus News
09/16/2026 09:59
On September 16, 2026, Salesforce Inc (NYSE: CRM) announced that its public-sector division has become its fastest-growing segment, driven by an 80% year-over-year surge in its defense business. This growth is fueled by increased adoption of artificial intelligence technologies by government agencies worldwide.
- GF Value™ verdict: Current price $252.47 vs GF Value™ $343.08, indicating CRM is approximately 26.4% undervalued
- GF Score™: 91/100, reflecting strong overall business quality and growth potential
- Insider activity: Net selling over the past 12 months with $52.6 million sold versus $26.5 million bought
What’s Behind the News?
Salesforce’s recent disclosure highlights the rapid expansion of its public-sector business, particularly within defense. The company reported an 80% year-over-year growth in this segment, attributed largely to government agencies’ accelerated adoption of AI-powered solutions. Salesforce now supports operations in over 30 countries and has secured major contracts, including a $5.6 billion deal with the U.S. Army to enhance its Missionforce platform. Additionally, the U.S. Air Force is modernizing its $13.5 billion vehicle fleet operations using Missionforce, while the Transportation Security Administration (TSA) employs an AI agent to handle roughly 100,000 traveler inquiries monthly. These developments underscore Salesforce’s increasing footprint in critical government infrastructure and AI-driven operational efficiency.
Founded in 1999, Salesforce is the world’s leading provider of cloud-based customer relationship management CRM software. Its comprehensive Customer 360 platform integrates sales, service, marketing, commerce, analytics, and AI capabilities. With a market capitalization of $207.78 billion, Salesforce operates in the technology sector under the software industry classification. The company’s strategic pivot toward AI and public-sector growth complements its established enterprise cloud computing solutions.
Is CRM Overvalued or Undervalued?
According to GuruFocus’ proprietary GF Value™ metric, Salesforce is trading at a significant discount to its intrinsic value. The GF Value™ for CRM stands at $343.08, while the current market price is $252.47, implying a margin of safety of approximately 26.4%. This suggests that the stock may be modestly undervalued relative to its historical trading multiples, growth prospects, and expected future performance.
Supporting this valuation view, CRM’s trailing twelve months (TTM) price-to-earnings (P/E) ratio is 23.01x, which is substantially lower than its five-year median P/E of 70.08x. This compression in valuation multiples could reflect market concerns or cyclical factors, but it also presents an opportunity for investors who believe in Salesforce’s long-term growth trajectory and profitability improvements. For more details on GF Value™, visit GF Value™.
What Does CRM’s GF Score™ Tell Us?
The GF Score™ is a composite rating that evaluates a company’s overall financial health, profitability, growth, valuation, and momentum to provide a snapshot of its investment quality. Salesforce’s GF Score™ of 91 out of 100 places it among the top tier of companies in terms of business strength and growth potential.
| Metric | Rating (out of 10) |
|---|---|
| GF Score™ | 91 |
| Financial Strength | 5 |
| Profitability | 9 |
| Growth | 10 |
| Valuation | 8 |
| Momentum | 5 |
Salesforce’s strongest sub-ranks are in Growth (10/10) and Profitability (9/10), reflecting its robust earnings expansion (57.7% year-over-year) and improving operating margins (21.52%). The Valuation rank of 8/10 aligns with the GF Value™ indication of modest undervaluation. However, Financial Strength scores a middling 5/10, partly due to an Altman Z-Score in the grey zone (2.81), indicating some financial stress, and a debt-to-equity ratio of 1.09. Momentum is moderate at 5/10, consistent with recent stock price gains but some volatility. For a detailed breakdown, visit CRM stock page.
What Are Gurus and Insiders Doing with CRM?
GuruFocus tracks 19 premium gurus holding Salesforce shares, with an equal split of 9 adding and 9 trimming their positions in recent quarters. This balanced activity suggests a cautious but engaged institutional investor base, reflecting confidence tempered by valuation and market conditions. Insider activity over the past 12 months shows net selling, with insiders offloading $52.6 million worth of shares against $26.5 million bought. Over the last three months, there was one insider sale involving 4,500 shares and no insider purchases reported. This insider selling may signal some caution among company executives despite strong operational performance.
What This Means for Investors
The combination of a high GF Score™ and a GF Value™ that suggests Salesforce is trading about 26% below its intrinsic worth presents a compelling valuation case for investors focused on quality growth stocks. While the company’s financial strength metrics warrant monitoring due to moderate leverage and an Altman Z-Score in the grey zone, Salesforce’s leadership in AI-driven public sector contracts and its expanding profitability underpin its strong growth outlook. The balanced guru ownership and insider selling activity add nuance, indicating mixed sentiment but no overwhelming red flags. Investors seeking exposure to a classic growth technology company with a margin of safety may find CRM’s current valuation attractive. For ongoing updates and comprehensive data, explore the CRM stock page or use the GuruFocus Stock Screener to identify similar opportunities.
Frequently Asked Questions
What is CRM’s GF Score™?
CRM’s GF Score™ is 91 out of 100, indicating a high-quality company with excellent growth and profitability metrics, balanced by moderate financial strength and momentum.
According to GF Value™, CRM is approximately 26.4% undervalued, trading at $252.47 versus an intrinsic value estimate of $343.08, suggesting a margin of safety for investors.
What is CRM’s P/E ratio compared to historical?
CRM’s current trailing P/E ratio is 23.01x, significantly lower than its five-year median P/E of 70.08x, indicating the stock is trading at a discount relative to its historical earnings multiples.
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.
