CRM DCF Analysis: Intrinsic Value $526 vs Price $256
GuruFocus News
08/31/2026 06:18
On August 31, 2026, we conducted a DCF analysis for Salesforce Inc CRM, a company that has shown notable price performance recently, with a 1-month increase of 41.0% despite a year-to-date decline of 2.9%. This analysis reveals a strong consensus across various valuation models indicating that Salesforce is significantly undervalued.
- DCF Earnings-based intrinsic value of $526.25 vs current price of $256.00 (margin of safety: 51.4%)
- DCF Free Cash Flow-based intrinsic value of $525.81, supporting the earnings-based valuation
- GF Score™ of 90/100, indicating high reliability of the DCF inputs
What Is CRM Worth? DCF Earnings-Based Model
The DCF earnings-based model for Salesforce Inc utilizes a two-stage approach to estimate intrinsic value. The first stage accounts for a high growth rate of 32.0% over the next ten years, followed by a terminal growth rate of 4% for the subsequent ten years. The discount rate applied is 11%, which reflects the risk associated with the investment.
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $16.84 |
| 10-Year Growth Rate | 32.0% |
| 10-Year Treasury Rate | 4.72% |
| Discount Rate (ceil(Treasury) + 6%) | 11% |
| Terminal Growth Rate | 4% |
The calculation summary for the DCF earnings-based model is as follows:
| Stage | Description | Value |
|---|---|---|
| Growth Stage (Years 1-10) | EPS growing at 32.0%, discounted at 11% | $221.63 |
| Terminal Stage (Years 11-20) | 4% terminal growth, discounted at 11% | $304.62 |
| Intrinsic Value | Growth + Terminal | $526.25 |
With a current price of $256.00 compared to an intrinsic value of $526.25, Salesforce is significantly undervalued, presenting a margin of safety of 51.4%. It is important to note that GuruFocus uses EPS excluding non-recurring items as research indicates a stronger correlation between stock prices and earnings than with free cash flow. For more detailed calculations, you can visit the CRM DCF Calculator.
What Does the Free Cash Flow DCF Say?
The intrinsic value based on the Free Cash Flow (FCF) DCF model is $525.81, which aligns closely with the earnings-based intrinsic value of $526.25. This agreement between the two models further reinforces the conclusion that Salesforce is significantly undervalued, with a margin of safety of 51.3%.
How Does GF Value™ Compare to the DCF Models?
The GF Value™ for Salesforce is calculated at $339.05, providing a third perspective on the valuation. GF Value™ is a proprietary measure from GuruFocus that takes into account historical trading multiples, past business growth, and future performance estimates. All three valuation models—DCF earnings, DCF FCF, and GF Value™—agree that Salesforce is undervalued, reinforcing the confidence in the analysis. For more on GF Value™, visit the GF Value™ page.
What Does CRM’s GF Score™ Tell Us?
The GF Score™ evaluates a company’s overall financial health, growth potential, and valuation metrics. Salesforce’s score of 90/100 indicates a strong position in these areas, suggesting that the inputs used in the DCF models are reliable. The predictability rank of 3/5 stars indicates moderate reliability for the DCF model, which is essential for investors to consider.
| Metric | Rating |
|---|---|
| GF Score™ | 90/100 |
| Financial Strength | 5/10 |
| Profitability | 9/10 |
| Growth | 10/10 |
| Valuation | 8/10 |
| Momentum | 4/10 |
Key Assumptions and Limitations
It is crucial to recognize that DCF models are highly sensitive to assumptions regarding growth and discount rates. Stocks with lower predictability ratings tend to yield less reliable DCF estimates. The terminal growth rate of 4% is a simplification that may not fully capture future market conditions.
What This Means for Investors
In summary, all three valuation models—DCF earnings, DCF FCF, and GF Value™—indicate that Salesforce is significantly undervalued. The consensus among these models provides a strong argument for potential upside in the stock. Additionally, the current activity among gurus shows that 19 gurus hold the stock, with 9 adding and 9 trimming their positions, while insiders have been net selling over the past year. This mixed signal from insider activity, combined with the strong valuation metrics, suggests a cautious but optimistic outlook for investors. For further insights, check out the CRM DCF Calculator.
Frequently Asked Questions
What is CRM’s intrinsic value based on DCF?
According to our analysis, the earnings-based intrinsic value is $526.25, while the FCF-based intrinsic value is $525.81.
Is CRM overvalued or undervalued?
Both the DCF and GF Value™ models indicate that CRM is significantly undervalued.
How reliable is the DCF model for CRM?
The predictability rank of 3/5 suggests that the DCF model is moderately 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.
