CRM Looks 38.4% Undervalued on GF Value™ as Q2 Beats Expectations
GuruFocus News
08/26/2026 15:57
On August 26, 2026, Salesforce Inc (NYSE: CRM) reported strong Q2 results, surpassing earnings and revenue forecasts, and raised its full-year revenue guidance. The announcement sent shares up 3.7% in after-hours trading, reflecting investor optimism amid solid operational execution.
- GF Value™ indicates CRM is trading at $205.62 versus an intrinsic value of $333.76, suggesting it is 38.4% undervalued.
- CRM’s GF Score™ stands at a robust 86/100, highlighting strong overall business quality and growth potential.
- Insider activity shows net selling over the past 12 months, with $27.4 million purchased against $59.3 million sold, while 21 top gurus hold CRM shares, balancing recent additions and trims.
What’s Behind the News?
Salesforce’s Q2 performance exceeded market expectations with a Non-GAAP EPS of $5.90, beating estimates by $2.63, and revenue of $11.35 billion, a 10.8% increase year-over-year and $30 million above consensus. The company also reported a current remaining performance obligation of $33.5 billion, up 14% from the prior year, signaling strong future revenue visibility. Importantly, Salesforce raised its full-year FY27 revenue guidance to a range of $46.1 billion to $46.4 billion, surpassing the consensus estimate of $46.11 billion. This guidance boost reflects confidence in sustained growth momentum across its cloud-based software offerings.
Salesforce Inc operates within the technology sector, specializing in software solutions primarily focused on customer relationship management CRM and enterprise cloud computing. With a market capitalization of $168.40 billion, Salesforce is a dominant player offering products such as Customer 360, Service Cloud, Marketing Cloud, Commerce Cloud, and MuleSoft for data integration. Its platform enables businesses to unify customer data and streamline sales, marketing, and service operations globally.
Is CRM Overvalued or Undervalued?
According to GuruFocus’ proprietary valuation metric, GF Value™, Salesforce’s intrinsic value is estimated at $333.76 per share, compared to its current trading price of $205.62. This implies a significant margin of safety of 38.4%, suggesting the stock is substantially undervalued relative to its historical trading multiples, growth trajectory, and future earnings potential. Such a discount offers investors a compelling valuation entry point, especially given Salesforce’s leadership in cloud software and consistent revenue expansion.
Examining the price-to-earnings ratio, CRM’s trailing twelve months (TTM) P/E stands at 23.8x, which is markedly lower than its 5-year median P/E of 71.71x. This compression in valuation multiples could reflect broader market sentiment or sector rotation but also reinforces the undervaluation thesis indicated by GF Value™. Investors seeking growth exposure at a reasonable price may find this valuation gap noteworthy.
For further details on GF Value™ methodology and its application to CRM, visit GF Value™.
What Does CRM’s GF Score™ Tell Us?
The GF Score™ aggregates multiple dimensions of a company’s financial health, profitability, growth, valuation, and momentum into a single comprehensive rating. CRM’s score of 86 out of 100 reflects a high-quality business with strong fundamentals. Notably, its Growth rank scores a perfect 10/10, underscoring Salesforce’s consistent revenue and earnings expansion. Profitability also ranks highly at 9/10, indicating efficient operations and margin improvements. However, the Valuation and Momentum ranks are more modest at 4/10 each, reflecting the current market price relative to intrinsic value and recent stock price trends. Financial Strength is rated 5/10, suggesting some caution due to factors like a moderate Altman Z-Score and debt levels.
| Metric | Rating |
|---|---|
| GF Score™ | 86/100 |
| Financial Strength | 5/10 |
| Profitability | 9/10 |
| Growth | 10/10 |
| Valuation | 4/10 |
| Momentum | 4/10 |
This profile suggests Salesforce is a classic growth stock with strong operational execution and expanding margins, but with some valuation and momentum headwinds to monitor. For more insights, see the CRM stock page.
What Are Gurus and Insiders Doing with CRM?
Salesforce is held by 21 premium gurus tracked by GuruFocus, with a near balance between recent buying and selling activity—9 gurus added shares while 11 trimmed positions in recent quarters. This mixed but engaged guru ownership indicates active management of exposure to CRM rather than a one-sided consensus. Insider activity over the past 12 months shows net selling, with insiders offloading $59.3 million worth of shares compared to $27.4 million purchased. While insiders remain invested, the net selling trend may reflect personal portfolio diversification or valuation considerations. This combination of guru and insider behavior provides a nuanced signal for investors evaluating CRM’s near-term prospects.
What This Means for Investors
Salesforce’s current valuation presents a compelling margin of safety, trading approximately 38% below its GF Value™ intrinsic estimate despite strong operational performance and raised guidance. The company’s excellent GF Score™ of 86, driven by top-tier growth and profitability metrics, reinforces the quality of the business. However, moderate financial strength and mixed insider/guru ownership trends suggest investors should weigh these factors carefully. Overall, the data supports viewing CRM as a significantly undervalued growth stock with solid fundamentals but some caution warranted on valuation and momentum fronts. For those interested in further analysis or screening similar opportunities, visit the CRM stock page or explore the GuruFocus Stock Screener.
Frequently Asked Questions
What is CRM’s GF Score™?
CRM’s GF Score™ is 86 out of 100, reflecting a high-quality company with strong growth and profitability, balanced by moderate financial strength and valuation metrics.
Based on GF Value™, CRM is 38.4% undervalued, trading at $205.62 compared to an intrinsic value of $333.76, indicating a significant margin of safety for investors.
What is CRM’s P/E ratio compared to historical?
CRM’s trailing P/E ratio is 23.8x, substantially lower than its 5-year median P/E of 71.71x, suggesting the stock is trading at a discount relative to its historical valuation levels.
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.
