CRM Looks 38.3% Undervalued on GF Value™ Heading into Q2 Earnings
GuruFocus News
08/25/2026 14:58
On August 25, 2026, Salesforce Inc (NYSE: CRM) is set to report its second-quarter earnings, drawing investor attention amid optimism about its valuation and growth prospects.
- GF Value™ indicates CRM is significantly undervalued, with a current price of $205.82 versus a GF Value™ of $333.76, implying a 38.3% margin of safety.
- CRM’s GF Score™ stands at a robust 86/100, reflecting strong overall financial health and growth potential.
- Insider activity over the past 12 months shows net selling, with insiders offloading $59.8 million worth of shares while purchasing $27.4 million, signaling cautious sentiment despite broad institutional support.
What’s Behind the News?
Salesforce is preparing to announce its Q2 fiscal 2027 earnings on August 26, 2026. Analysts expect earnings per share of $3.27, a 12.4% increase year-over-year, and revenue of $11.32 billion, up 10.5%. These projections come amid concerns about how artificial intelligence might disrupt traditional software models. However, Salesforce’s recent AI-driven innovations, such as Headless 360, alongside strong recurring revenue streams from Agentforce and Data 360, position the company to capitalize on AI integration rather than be sidelined by it. Historically, Salesforce has beaten EPS estimates 88% of the time over the past two years, underscoring its operational resilience.
Salesforce Inc operates in the technology sector, specifically within the software industry, offering cloud-based customer relationship management CRM solutions. Its flagship Customer 360 platform integrates customer data across multiple channels to enhance sales, marketing, and service functions. The company’s market capitalization stands at $168.57 billion, reflecting its status as a major player in enterprise cloud computing.
Is CRM Overvalued or Undervalued?
According to GuruFocus’ proprietary GF Value™ metric, Salesforce is trading at a substantial discount. The GF Value™ of $333.76 compared to the current share price of $205.82 suggests the stock is undervalued by approximately 38.3%. This margin of safety indicates that the market price does not fully reflect the company’s intrinsic worth based on its historical trading multiples, growth trajectory, and earnings potential. Investors seeking value in the technology sector may find this gap compelling, especially given Salesforce’s consistent revenue and earnings expansion.
Examining valuation multiples, CRM’s trailing twelve-month price-to-earnings (P/E) ratio is 23.82x, which is significantly lower than its five-year median P/E of 71.8x. This compression in valuation multiples could be attributed to market concerns over AI disruption and broader tech sector volatility. However, the lower P/E relative to historical norms further supports the GF Value™ indication that CRM shares are undervalued at present. For more details on GF Value™, visit GF Value™.
What Does CRM’s GF Score™ Tell Us?
The GF Score™ is a composite measure that evaluates a company’s overall financial health, profitability, growth, valuation, and momentum to provide a holistic view of its investment quality. Salesforce’s GF Score™ of 86 out of 100 places it well above average, signaling strong fundamentals and growth prospects. Its highest sub-ranks are in Growth (10/10) and Profitability (9/10), reflecting Salesforce’s consistent revenue and earnings expansion and improving operating margins. Conversely, its Valuation (4/10) and Momentum (4/10) ranks are more modest, indicating room for improvement in market sentiment and price trends.
| Metric | Rating |
|---|---|
| GF Score™ | 86/100 |
| Financial Strength | 5/10 |
| Profitability | 9/10 |
| Growth | 10/10 |
| Valuation | 4/10 |
| Momentum | 4/10 |
Salesforce’s strong growth and profitability metrics underscore its ability to expand margins and generate cash flow, while its middling financial strength rank reflects some caution due to factors like a moderate Altman Z-Score and debt-to-equity ratio. The relatively low valuation and momentum ranks suggest that the market has not fully priced in Salesforce’s fundamentals, aligning with the GF Value™ undervaluation signal. For further details, see the CRM stock page.
What Are Gurus and Insiders Doing with CRM?
GuruFocus tracks 21 premium gurus holding Salesforce shares, with a near-even split in recent quarters: 9 gurus have added to their positions while 11 have trimmed holdings. This mixed guru activity indicates a balanced but cautious institutional stance. Insider activity over the past 12 months shows net selling, with insiders selling $59.8 million worth of shares compared to $27.4 million purchased. This net insider selling could reflect personal portfolio rebalancing or cautious outlooks despite the company’s strong fundamentals. Notably, there have been no insider transactions reported in the last three months.
What This Means for Investors
The GF Value™ analysis positions Salesforce as significantly undervalued relative to its intrinsic worth, offering a meaningful margin of safety for investors who believe in the company’s long-term growth story. While the stock’s P/E ratio is well below its historical median, reflecting market skepticism, Salesforce’s robust GF Score™ and strong growth and profitability ranks highlight its operational strength. The mixed signals from guru and insider activity suggest some caution but also institutional conviction in the company’s prospects. Overall, the valuation gap combined with solid fundamentals makes CRM a noteworthy candidate for investors seeking exposure to enterprise cloud software with AI-driven innovation potential. For a deeper dive into Salesforce’s financials and valuation, visit the CRM stock page or explore opportunities using the GuruFocus Stock Screener.
Frequently Asked Questions
What is CRM’s GF Score™?
CRM’s GF Score™ is 86 out of 100, indicating strong overall financial health, excellent growth, and profitability, though valuation and momentum ranks are more moderate.
Based on GF Value™, CRM is significantly undervalued by approximately 38.3%, with a GF Value™ of $333.76 compared to a current price of $205.82.
What is CRM’s P/E ratio compared to historical?
CRM’s trailing twelve-month P/E ratio is 23.82x, substantially lower than its five-year median P/E of 71.8x, suggesting the stock is trading at a discount relative to its historical valuation.
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.
