CRM DCF Analysis: Intrinsic Value $433 vs Price $209
GuruFocus News
08/25/2026 06:03
On August 25, 2026, we conducted a DCF analysis for Salesforce Inc CRM to assess its intrinsic value in light of recent price performance. The stock has seen a notable increase of 27.7% over the past month, although it remains down 20.7% year-to-date and 15.1% over the last year. This context is crucial for understanding the valuation landscape.
- DCF Earnings-based intrinsic value of $432.81 vs current price of $209.06 (margin of safety: 51.7%)
- DCF Free Cash Flow (FCF)-based intrinsic value of $503.69 (providing a second opinion)
- GF Score™ of 86/100, indicating a high level of reliability in the DCF inputs
What Is CRM Worth? DCF Earnings-Based Model
To determine the intrinsic value of Salesforce Inc, we employed a two-stage DCF model. The first stage reflects a high growth phase, while the second stage accounts for a more stable growth rate. Below are the key assumptions used in our analysis:
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $13.85 |
| 10-Year Growth Rate | 32.0% |
| 10-Year Treasury Rate | 4.67% |
| Discount Rate (ceil(Treasury) + 6%) | 11% |
| Terminal Growth Rate | 4% |
In the first stage, we project that EPS will grow at 32.0% per year for the next 10 years, which is then discounted at 11%. The second stage assumes a terminal growth rate of 4% for the following 10 years, also discounted at 11%. The summary of our calculations is as follows:
| Stage | Description | Value |
|---|---|---|
| Growth Stage (Years 1-10) | EPS growing at 32.0%, discounted at 11% | $182.28 |
| Terminal Stage (Years 11-20) | 4% terminal growth, discounted at 11% | $250.53 |
| Intrinsic Value | Growth + Terminal | $432.81 |
With the current price at $209.06, Salesforce Inc is significantly undervalued, presenting a margin of safety of 51.7%. It is important to note 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 more detailed calculations, visit the CRM DCF Calculator.
What Does the Free Cash Flow DCF Say?
In addition to the earnings-based model, we also evaluated Salesforce Inc using a Free Cash Flow (FCF) DCF model. The intrinsic value derived from this model is $503.69, which further supports the conclusion from the earnings-based DCF model. Both models indicate that Salesforce Inc is significantly undervalued, with a margin of safety of 58.5% in the FCF analysis.
How Does GF Value™ Compare to the DCF Models?
The GF Value™ for Salesforce Inc is calculated at $333.76, providing a third perspective on its valuation. This proprietary measure from GuruFocus is derived from historical trading multiples, past business growth, and future performance estimates. All three models—the DCF earnings, DCF FCF, and GF Value™—align in suggesting that Salesforce Inc is undervalued, reinforcing the investment thesis. For more insights, check the GF Value™.
What Does CRM’s GF Score™ Tell Us?
The GF Score™ measures a company’s financial strength, profitability, growth potential, valuation, and momentum, offering a comprehensive view of its overall health. Salesforce Inc has a GF Score™ of 86/100, indicating strong fundamentals. The predictability rank of 3/5 stars suggests that the DCF model’s estimates are reasonably reliable for this stock.
| Metric | Rating |
|---|---|
| GF Score™ | 86/100 |
| Financial Strength | 5/10 |
| Profitability | 9/10 |
| Growth | 10/10 |
| Valuation | 4/10 |
| Momentum | 4/10 |
For further details on Salesforce Inc, 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. Companies with lower predictability ratings tend to produce less reliable DCF estimates. The terminal growth rate of 4% used in this analysis is a simplifying assumption that may not fully capture future economic conditions.
What This Means for Investors
In summary, all three valuation models—DCF earnings, DCF FCF, and GF Value™—indicate that Salesforce Inc is significantly undervalued. This consensus is further supported by the guru ownership signal, with 21 gurus currently holding the stock, 9 of whom have added to their positions, while 11 have trimmed their stakes. Additionally, insider activity shows net selling over the past 12 months, which could signal caution. Overall, these insights suggest a compelling case for further investigation into Salesforce Inc. For a deeper dive into the DCF analysis, visit the CRM DCF Calculator.
Frequently Asked Questions
What is CRM’s intrinsic value based on DCF?
Answer: earnings-based $432.81, FCF-based $503.69
Is CRM overvalued or undervalued?
Answer: Based on the DCF and GF Value™ consensus, CRM is significantly undervalued.
How reliable is the DCF model for CRM?
Answer: The predictability rank is 3/5, indicating a moderate level of reliability for the DCF model.
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.
