GuruFocus News
09/14/2026 06:16
On September 14, 2026, we conducted a Discounted Cash Flow (DCF) analysis for Salesforce Inc CRM, which has shown a mixed price performance recently. The stock is currently priced at $247.72, reflecting a year-to-date decline of 6.0% but a notable one-month increase of 25.4%. This analysis reveals a consensus across multiple valuation models indicating that Salesforce is significantly undervalued.
- DCF Earnings-based intrinsic value of $526.25 vs current price of $247.72 (margin of safety: 52.9%)
- DCF Free Cash Flow-based intrinsic value of $525.81, corroborating the earnings-based assessment
- GF Score™ of 91/100, suggesting strong reliability of the DCF inputs
What Is CRM Worth? DCF Earnings-Based Model
The DCF earnings-based model incorporates a two-stage growth approach to estimate the intrinsic value of Salesforce. In the first stage, we project earnings growth over the next ten years, followed by a terminal growth phase. This method provides a comprehensive view of the company’s potential future earnings.
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $16.84 |
| 10-Year Growth Rate | 32.0% |
| 10-Year Treasury Rate | 4.96% |
| Discount Rate (ceil(Treasury) + 6%) | 11% |
| Terminal Growth Rate | 4% |
In the first stage (Years 1-10), we expect EPS to grow at 32.0% annually, discounted at a rate of 11%. The calculated value for this growth stage is $221.63 per share. In the second stage (Years 11-20), we assume a terminal growth rate of 4%, also discounted at 11%, resulting in a terminal stage value of $304.62 per share.
| 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 the current price at $247.72, the intrinsic value of $526.25 indicates that Salesforce is significantly undervalued, with a margin of safety of 52.9%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research shows that stock prices correlate more closely with earnings than with free cash flow. For further details, you can visit the CRM DCF Calculator.
What Does the Free Cash Flow DCF Say?
The DCF model based on Free Cash Flow (FCF) provides an intrinsic value of $525.81, which aligns closely with the earnings-based intrinsic value of $526.25. This agreement between the two models reinforces the conclusion that Salesforce is significantly undervalued, with a margin of safety of 52.9%.
How Does GF Value™ Compare to the DCF Models?
The GF Value™ for Salesforce is calculated at $342.57, offering a third perspective on the valuation. This proprietary measure from GuruFocus is derived from historical trading multiples, past business growth, and future performance estimates. All three models—DCF earnings, DCF FCF, and GF Value™—concur that Salesforce is undervalued, reinforcing the reliability of the analysis. For more information, 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’s score of 91/100 indicates a robust financial profile, suggesting that the inputs used in the DCF models are reliable. The predictability rank of 3/5 stars implies that while the DCF model is useful, it may not be as reliable as for companies with higher predictability ratings.
| Metric | Rating |
|---|---|
| GF Score™ | 91/100 |
| Financial Strength | 5/10 |
| Profitability | 9/10 |
| Growth | 10/10 |
| Valuation | 8/10 |
| Momentum | 5/10 |
For further details on Salesforce’s performance, visit the CRM stock page.
Key Assumptions and Limitations
It is crucial to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with lower predictability ratings, like Salesforce’s 3/5 stars, tend to produce less reliable DCF estimates. The terminal growth rate of 4% is a simplifying assumption 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 suggests a strong investment opportunity, although it is essential to consider the mixed signals from guru ownership activity, where 19 gurus currently hold the stock, with 9 adding and 9 trimming their positions. Additionally, insider activity shows net selling over the past 12 months, which could be a point of caution. For a detailed analysis, check out the CRM DCF Calculator.
Frequently Asked Questions
What is CRM’s intrinsic value based on DCF?
Based on the DCF 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™ consensus indicate that CRM is significantly undervalued.
How reliable is the DCF model for CRM?
The DCF model’s reliability is moderate, as indicated by a predictability rank of 3/5 stars.
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.
