Salesforce CRM Stock Price Trading at $239, 28% Undervalued Against Fair Value

NYSE:CRM Under Pressure but Fundamentals Point to Long-Term Upside

Salesforce (NYSE:CRM) trades at $239.82, down more than 1% on the day, with its market cap at $230.8 billion. The stock has slid nearly 35% from its 52-week high of $369, yet year-to-date it has returned 28.03%, outpacing the S&P 500’s 12.40%. Over five years, CRM has delivered only 3.45%, a stark underperformance compared with the S&P’s 95%, but beneath the weak stock trajectory lies a company that has doubled revenue, widened margins, and built a cash-generating engine that Wall Street may be underpricing.

Earnings Momentum: Growth in Revenue and Margins

For the latest quarter ending July 31, 2025, Salesforce reported $10.24 billion in revenue, up 9.8% year-over-year and surpassing $10 billion for the first time. Subscription and support revenue contributed $9.7 billion, rising 11% YoY, while professional services added $563 million. Gross profit rose to $7.99 billion, reflecting a 78.1% margin, compared with 76.9% a year ago. Operating income expanded 24.1% YoY to $2.34 billion, while net income surged 32% to $1.89 billion. Diluted EPS hit $2.91, a 4.7% beat over consensus. This performance reinforced Salesforce’s ability to deliver double-digit profitability growth even with single-digit top-line expansion.

Cash Flow, Dividends, and Buybacks

Free cash flow over the trailing twelve months reached $13.9 billion, representing a 31.6% margin on revenue, while operating cash flow was $13.17 billion. The balance sheet shows $15.37 billion in cash against $11.81 billion in debt, with leverage low at a 19.25% debt-to-equity ratio. Salesforce paid a quarterly dividend of $0.415 per share, or a forward yield of 0.69%, with an ex-dividend date on September 17, 2025. More importantly, management expanded its share buyback authorization by $20 billion, bringing the total to $50 billion, after already returning $2.6 billion in Q2 through $2.2 billion in repurchases and $399 million in dividends. This aggressive capital return strategy reflects confidence in undervaluation.

Valuation Metrics and Comparisons

At $239.82, Salesforce trades at a forward P/E of 21.37 and a PEG ratio of 1.28, markedly below the sector median of 24.5× earnings. By 2027, EPS is projected at $12.70, implying CRM trades at just 16.7× forward earnings, a discount to peers like ServiceNow (NYSE:NOW) at ~55× and Adobe (NASDAQ:ADBE) at ~27×. Salesforce’s price-to-sales multiple is 5.94×, far lower than Snowflake (NYSE:SNOW) at 18× and even below Shopify (NYSE:SHOP) at 8×, despite Salesforce generating $39.5 billion in annual revenue and $6.66 billion in net income.

AI and Data Cloud Drive Strategic Growth

Salesforce is reshaping its portfolio with AI at the center. Annual recurring revenue from Data Cloud and AI surpassed $1.2 billion, up 120% YoY, with over 12,500 deals signed. More than 6,000 were secured through Agentforce, and 40% of bookings came from existing customers, confirming strong adoption. Salesforce is embedding agentic AI capabilities across Sales Cloud, Service Cloud, Marketing Cloud, Commerce Cloud, Tableau, and Field Service. The company is also launching AI-driven IT Service Management, directly competing with ServiceNow. With the ITSM market projected to grow at 14.4% CAGR, this expansion creates a new high-margin growth channel.

Acquisitions Expand AI Capabilities

In August 2025, Salesforce acquired Bluebirds, an AI sales prospecting platform, Waii, a generative AI database query tool, and Regrello, an AI-driven process automation platform. These bolt-ons will be integrated into Agentforce and Sales Cloud, enhancing CRM’s edge in enterprise AI adoption. Unlike the $27.7 billion Slack deal that raised concerns about overpayment, these smaller acquisitions target productivity and recurring revenue at modest valuations. They strengthen Salesforce’s moat against challengers like Microsoft’s Dynamics and Oracle.

Institutional and Insider Activity in NYSE:CRM

Institutions control over 83% of outstanding shares, underscoring deep institutional confidence. Insider ownership is modest at 2.6%, but transactions remain notable. Several Salesforce executives sold small stakes in Q3, consistent with compensation cycles. Investors can monitor these moves in Salesforce’s stock profile and insider transactions. Importantly, buybacks outweigh insider selling, and hedge funds remain net long.

Guidance and Analyst Expectations

Salesforce raised its FY2026 revenue guidance to $41.1–41.3 billion, with analysts projecting FY2027 sales near $45 billion. Current consensus for FY2026 EPS is $11.34, rising to $12.70 in 2027, reflecting 11–12% annual growth. Analyst targets range from $221 (low) to $430 (high), with the average at $334.68, suggesting 39% upside from today’s levels. Deutsche Bank, Oppenheimer, and Wedbush recently reiterated bullish ratings, with Wedbush assigning a $425 price target.

Performance Context: Lagging the S&P but YTD Recovery

Despite strong fundamentals, Salesforce’s five-year return of 3.45% pales against the S&P’s 95.3% and even underperforms peers like ServiceNow and Adobe. Still, YTD performance of 28% shows investors are re-rating the stock after its 2024 decline. With a beta of 1.22, volatility is moderate, making CRM less risky than high-growth software peers like Snowflake (beta ~1.8).

Outlook on NYSE:CRM — Buy Case Strengthens

With accelerating margins, robust free cash flow, $15 billion in cash reserves, aggressive AI expansion, and a $50 billion buyback authorization, Salesforce looks positioned for a re-rating. At 21× forward earnings, with EPS projected to grow nearly 28% by 2027, valuation is compelling relative to peers. Risks include competitive threats from Microsoft and ServiceNow, seasonal weakness in September–December, and the five-year history of underperformance. Yet the structural story is improving, and the numbers show a company trading at recession-level multiples despite growth. On balance, NYSE:CRM is a Buy, with medium-term upside toward $334–$350, and potential for a long-term re-test of $400–$425 if AI adoption accelerates and ITSM expansion gains traction.

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