CRM DCF Analysis: Intrinsic Value $238 vs Price $234
GuruFocus News
09/28/2026 06:21
On September 28, 2026, we delve into the DCF analysis for Salesforce Inc CRM, a company currently trading at $234.02. The stock has seen a mixed performance recently, with a year-to-date decline of 11.1% and a slight decrease of 1.6% over the past week. Here are some key points to consider:
- DCF Earnings-based intrinsic value of $237.77 compared to the current price, indicating a margin of safety of 1.6%.
- DCF Free Cash Flow (FCF)-based intrinsic value stands at $478.67, suggesting a significantly undervalued position.
- GF Score™ of 88/100 indicates strong financial health and growth potential, but with a predictability rank of 2/5 stars, the reliability of the DCF inputs is lower.
What Is CRM Worth? DCF Earnings-Based Model
The DCF earnings-based model for Salesforce Inc employs a two-stage valuation approach. The first stage considers a growth phase where earnings per share (EPS) is projected to grow at 0.0% for the next 10 years, followed by a terminal phase with a 4% growth rate for the subsequent 10 years. Below is a summary of the key assumptions used in this model:
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $8.35 |
| 10-Year Growth Rate | 0.0% |
| 10-Year Treasury Rate | 5.23% |
| Discount Rate (ceil(Treasury) + 6%) | 12% |
| Terminal Growth Rate | 4% |
In the first stage, the growth phase (Years 1-10) results in a value of $171.33 per share, while the terminal phase (Years 11-20) contributes an additional $66.44 per share. The combined intrinsic value from both stages is summarized in the table below:
| Stage | Description | Value |
|---|---|---|
| Growth Stage (Years 1-10) | EPS growing at 0.0%, discounted at 12% | $171.33 |
| Terminal Stage (Years 11-20) | 4% terminal growth, discounted at 12% | $66.44 |
| Intrinsic Value | Growth + Terminal | $237.77 |
With the current price at $234.02, the stock appears to be fairly valued, offering a margin of safety of 1.6%. It is important to note that GuruFocus utilizes EPS figures excluding non-recurring items, as research indicates that stock prices tend to correlate more closely with earnings than with free cash flow. For further analysis, you can visit the CRM DCF Calculator.
What Does the Free Cash Flow DCF Say?
The free cash flow (FCF)-based intrinsic value for Salesforce Inc is calculated at $478.67. This valuation significantly contrasts with the earnings-based model, indicating a substantial undervaluation of 51.1%. While the earnings-based DCF suggests a fair valuation, the FCF model presents a compelling case for a much higher intrinsic value, highlighting the discrepancies between the two approaches.
How Does GF Value™ Compare to the DCF Models?
The GF Value™ for Salesforce Inc is calculated at $346.11, providing yet another perspective on the company’s valuation. GF Value™ is a proprietary measure from GuruFocus that takes into account historical trading multiples, past business growth, and future performance estimates. In this case, the GF Value™ aligns more closely with the FCF-based DCF, suggesting that Salesforce Inc may be undervalued when considering cash flow dynamics. However, the earnings-based DCF and GF Value™ present differing views, indicating a need for cautious interpretation. For more details, visit the GF Value™ page.
What Does CRM’s GF Score™ Tell Us?
The GF Score™ evaluates a company’s financial strength, profitability, growth potential, valuation, and momentum. Salesforce Inc has a strong GF Score™ of 88/100, indicating robust financial health and growth prospects. However, the predictability rank of 2/5 stars suggests that the DCF model’s reliability is limited for this stock. Below is a summary of the GF Score™ metrics:
| Metric | Rating |
|---|---|
| GF Score™ | 88/100 |
| Financial Strength | 5/10 |
| Profitability | 8/10 |
| Growth | 10/10 |
| Valuation | 4/10 |
| Momentum | 7/10 |
For more insights, visit the CRM stock page.
Key Assumptions and Limitations
It is essential to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with lower predictability ratings, such as Salesforce Inc’s 2/5 stars, yield less reliable DCF estimates. The terminal growth rate of 4% used in this analysis is a simplifying assumption that may not accurately reflect future performance.
What This Means for Investors
In synthesizing the three valuation models—DCF earnings, DCF FCF, and GF Value™—a clear tension emerges. While the earnings-based DCF suggests Salesforce Inc is fairly valued, the FCF model indicates significant undervaluation, and the GF Value™ aligns more closely with the latter. This discrepancy highlights the importance of qualitative factors and market sentiment, particularly given the current guru ownership dynamics: 19 gurus hold the stock, with 9 adding and 9 trimming positions in recent quarters, alongside net selling by insiders over the past 12 months. This mixed signal should be carefully considered by investors. For a deeper dive into the valuation, check out the CRM DCF Calculator.
Frequently Asked Questions
What is CRM’s intrinsic value based on DCF?
Answer: earnings-based $237.77, FCF-based $478.67.
Is CRM overvalued or undervalued?
Answer: The earnings-based DCF suggests fair valuation, while the FCF-based DCF indicates significant undervaluation.
How reliable is the DCF model for CRM?
Answer: The predictability rank of 2/5 suggests that the DCF model is less reliable for this stock.
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.
