Salesforce, Inc. (CRM): what the price requires
At today's price, Salesforce, Inc. (CRM) is priced for +6.3% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/CRM
Headline
| Field | Value |
|---|---|
| Ticker | CRM |
| Company | Salesforce, Inc. |
| Current price | $169.52/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 3.7% |
| Operating margin today | 21.2% |
| Margin compression implied | -17.5pp |
| Implied growth | 6.3% |
| Multiple paid | 19x operating income |
The operating-margin requirement is derived from the framework's value band at year 9, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.2pp.
Reconcile: at the x-ray's 9.3% required return this reads ~15.4%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.75σ |
| cohort percentile (of 177 peers) | 32 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.05x | 5 | expensive |
| Earnings | 1.69x | 5 | expensive |
| Relative | 0.55x | 5 | justifies |
| Growth | 0.62x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.3%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $614.53 | 0.28x | yes | FCF base $15.5B, growth 11% (input: historical growth), terminal g 4.0%, WACC 7.3%, 6yr projection |
| DCF Exit Multiple | Growth | $275.28 | 0.62x | yes | Exit EV/EBITDA: 12.4x / 14.4x / 16.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $309.01 | 0.55x | yes | P/E 35x (sector median), scenarios: 28.9x / 35.0x / 41.1x (bear / base = sector held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $82.68 | 2.05x | yes | BV/sh $39.31, ROE (TTM) 19.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $118.57 | 1.43x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $152.56 | 1.11x | yes | Rev $42.8B, growth 11% (input: historical growth; tapered), Terminal P/S: 2.9x / 3.4x / 4.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $253.26 | 0.67x | yes | EPS $7.24, growth 35% (input: historical EPS growth), PEG=0.63 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $27.77 | 6.10x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $5.41B × (1−23%) / WACC 7.3% → EPV (no growth) |
| Residual Income | Asset | $115.58 | 1.47x | yes | BV $39.31 + 5yr PV of (ROE (TTM) 19.5% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $80.00 | 2.12x | yes | √(22.5 × EPS $7.24 × BVPS $39.31) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $321.21 | 0.53x | yes | EBITDA $12.51B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $144.14 | 1.18x | yes | FCF $14661.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $100.06 | 1.69x | yes | SBC-adj FCF $11.11B (FCF $14.66B − SBC $3.55B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $233.49 | 0.73x | yes | EPS $7.24 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $14.49 | 11.70x | yes | BV $39.31 × (ROIC 2.7% / WACC 7.3%) |
| P/Sales Sector | Relative | $393.38 | 0.43x | yes | Revenue $42.83B × sector P/S 8.0x |
| PEG Fair Value | Relative | $271.35 | 0.62x | yes | EPS $7.24 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $78.23 | 2.17x | yes | EPS $7.24 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $28.0b |
| Net debt / NOPAT (after-tax) | 4.10x |
| Net debt / operating income (pre-tax) | 3.18x |
| Interest coverage | 17.0x |
| Share count CAGR (buyback) | -3.4% |
| Burning cash | no |
Bullet Takeaways
- Salesforce is the default system of record for enterprise sales and service, a business throwing off roughly $14.7 billion of free cash flow a year, yet the stock has fallen about 25% in 2026 as the market re-rates it from a growth name toward a mature one.
- The defining number is growth: full-year fiscal 2026 revenue rose 10% to $41.5 billion and fiscal 2027 is guided to about 11%, the kind of low-double-digit pace that no longer earns a premium software multiple on its own.
- What to watch is whether AI reaccelerates the top line: the Agentforce platform reached $1.2 billion in annualized revenue, up 205% year over year, and the bet is whether agentic AI adds seats and usage faster than it lets customers do more with fewer of them.
Bull Case
The surprising thing about Salesforce today is how little growth the price assumes. Read backward, the current price embeds operating-profit growth of only about 2.7% a year for five years. For a company that grew revenue 10% last year and guides to 11% this year, that is the market pricing in a near-stall, and it is the opposite of the rich-multiple problem software investors usually worry about. The bull case is simply that the business is worth more than a near-no-growth assumption implies, and the cash generation makes that case on its own.
The cash is the foundation. Salesforce produces around $14.7 billion of free cash flow annually at a roughly 20% operating margin, and management is returning it aggressively: a $50 billion buyback authorization, with the share count already falling about 3.4% a year. A company buying back stock at this scale, while the multiple is compressed, retires far more earnings power per dollar than it would at a premium valuation. Interest is covered more than fifteen times even after the debt added to fund part of the buyback, so the balance sheet carries the capital-return program comfortably.
The growth optionality is real and accelerating in the one place that matters. Agentforce, the company's agentic AI layer, reached $1.2 billion in annualized revenue up 205% year over year, and combined with Data 360 the AI-and-data business is near $3.4 billion of recurring revenue, up over 200%. Salesforce's advantage here is the data: its filings note that "Tableau enriches Agentforce with best-in-class data visualizations and business context, lowering the barriers of data access for everyone," and the agents run on top of the customer records Salesforce already holds. If agentic AI turns into a genuine new product cycle rather than a feature, it reaccelerates a top line the market has already written off, and the price is paying nothing for that outcome.
Bear Case
The structural truth a Salesforce holder would rather not face is that the core franchise has matured, and AI may take as much as it gives. Revenue growth has settled into the low double digits, 10% in fiscal 2026 and a guided 11% in fiscal 2027, and the fiscal 2027 outlook landed light enough that the market treated it as confirmation the deceleration is structural, not temporary. The bear case is not that Salesforce shrinks. It is that the company is now a mid-teens-or-lower grower whose price still occasionally hopes for more, and each light guide closes that gap the hard way.
The narrative dependency that worries the bear most is the very AI story the bull leans on. Agentforce is growing fast off a small base, but the question underneath it is whether AI agents add seats or replace them. Salesforce's pricing has historically been per-user; if agents let a customer's service team do the same work with fewer human seats, the AI revenue could cannibalize the subscription revenue it sits on top of. The company itself flags "competition from smaller, younger competitors that may be more agile in responding to customers' demands and offer more targeted and simplified solutions," warning those rivals "may be able to respond more quickly" to the AI shift. A wave of AI-native CRM challengers attacking a 25-year-old platform is exactly the kind of disruption a large installed base makes slow to counter.
On the valuation, the methods split in a way that frames the debate honestly. The relative-multiple and growth-DCF lenses say the price is reasonable to cheap, but the asset-value and earnings-power lenses say it is expensive, because the return on equity sits below what the price-to-book demands and the normalized operating earnings are lower than the headline cash flow suggests. State the requirement plainly: even the modest 2.7%-a-year implied operating growth has to actually materialize for the price to hold, and if AI both fails to reaccelerate growth and pressures the per-seat model, operating profit could grow slower than that, pushing the multiple toward where the asset and earnings-power methods land, well below today's price. The $25 billion of new debt taken on to fund half the buyback is the amplifier: it is sensible at a compressed multiple, but it raises the stakes on the growth not deteriorating further.
Valuation
The price is making a modest bet, which is itself the story for a company that spent a decade as a premium growth name. Read backward, today's level pays about 18 times company-wide operating income, implying operating-profit growth of only roughly 2.7% a year for five years. Keep that approximate; it is one solve. The notable thing is how undemanding it is: that implied pace is well below the 10% to 11% revenue growth the company is actually delivering, and the multiple sits in the lower half of the software peer range. The market is pricing Salesforce as a mature, slowing business, not a growth one.
The methods we use to triangulate split cleanly along the growth-versus-value line. The relative-multiple methods, comparing against the software sector, land well above the price, calling it cheap. The growth-DCF methods land above it too once even modest growth is credited. But the asset-value methods, anchored on book value plus profitability, and the earnings-power methods land below the price, because the return on equity is good but not extraordinary and the normalized operating earnings, depressed by years of restructuring charges and heavy stock compensation, understate the cash the business actually generates. The cash-flow lens is the more honest one here: roughly $14.7 billion of free cash flow against the current market value is a yield a mature compounder rarely offers, and on a stock-comp-adjusted basis the cash is still substantial.
Solvency is comfortable and supports the capital-return thesis. Net debt of about $28 billion looks large, but interest is covered more than fifteen times, the company is generating cash rather than burning it, and the gross debt rose largely to fund a buyback rather than to plug an operating hole. The falling share count is direct evidence of that buyback deploying. The downside is bounded by an entrenched enterprise franchise and prodigious cash generation, not by net cash. What the price is really weighing is durability: whether low-double-digit growth holds, and whether the Agentforce ramp turns into a second growth engine or merely offsets maturation in the core.
Catalysts
The defining catalyst is the trajectory of agentic AI revenue. Agentforce reached $1.2 billion in annualized revenue, up 205% year over year, and the combined Agentforce and Data 360 business is near $3.4 billion in recurring revenue, with 3.8 billion agentic work units delivered to date across Agentforce and Slack. Whether that ramp continues fast enough to reaccelerate total revenue, rather than just offset slowing growth in the legacy clouds, is the single biggest swing factor. Each quarter's Agentforce ARR disclosure is the cleanest read on whether the AI thesis is real.
The capital-return program is the second catalyst, and it is already in motion. Salesforce authorized a $50 billion buyback, with roughly half funded by new debt, at a moment the stock trades down about 25% on the year. Aggressive repurchase at a compressed multiple is accretive, and the pace of execution against that authorization is worth tracking as a driver of per-share growth independent of the top line.
On growth and guidance, fiscal 2027 revenue is guided to $45.9 billion to $46.2 billion, up about 11%, after full-year fiscal 2026 came in at $41.5 billion, up 10%. The light full-year guide is what pressured the stock, so a future raise would be a meaningful signal that growth is stabilizing or reaccelerating. The Informatica acquisition, adding more than $700 million of sticky data-management ARR, is the inorganic lever to watch on integration. Analysts hold a moderate-buy consensus with an average target near $251, though the range runs from roughly $160 to $475, a spread that captures exactly how divided the view is on whether AI reaccelerates this business. The next earnings print is the test of whether Agentforce momentum and the buyback are bending the per-share trajectory back upward.
Peer Cohorts (Per Segment, With Filing Citations)
Cloud software & platform (single operating segment) (reported)
- NOW (ServiceNow, Inc.)
- (no filing in the citation store)
- SAP (SAP SE)
- (no filing in the citation store)
- ORCL (Oracle Corp)
- (no filing in the citation store)
- ADBE (ADOBE INC.)
- (no filing in the citation store)
- INTU (INTUIT INC.)
- (no filing in the citation store)
- ADSK (AUTODESK, INC.)
- (no filing in the citation store)
- SHOP (Shopify Inc.)
- (no filing in the citation store)
- NICE (NICE LTD.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Salesforce Q1 FY2027 results · Salesforce buyback announcement, 2026 · CRM solvency, latest filings · CRM FY2025 10-K, accession 0001108524-25-000006 · Salesforce FY2026 and FY2027 results · Informatica acquisition coverage, 2026 · analyst consensus, 2026