Salesforce, Inc. (CRM) stock analysis

P/E below its 5-year median

Salesforce's P/E of 19.9 is below its own 5-year median of 52.8.

P/E below the industry

Salesforce's P/E of 19.9 is below the Computer Programming, Data Processing, and Other Computer Related Services median of 27.6.

EV/EBITDA below its 5-year median

Salesforce's EV/EBITDA of 20.3 is below its 5-year median of 44.0.

P/B above the industry

Salesforce's price-to-book of 4.68 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 3.32.

Trading below fair value

The share price of $218.01 is below our fair value estimate of $330.97.

Margin of safety over 20%

The price is 34.1% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 9.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 234% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 45.0% over the last twelve months, against a 5-year average of 12.9% a year.

Growing faster than the industry

Revenue grew 11.2% over the last twelve months; the Computer Programming, Data Processing, and Other Computer Related Services median is 9.6%.

Guidance raised

Salesforce raised its Full Year FY27 Revenue outlook on Aug 26, 2026.

Gross margin slipping

Gross margin was 77.3% over the last twelve months, against 77.6% a year earlier.

Return on equity under 15%

Return on equity was 19.4% over the last twelve months and averaged 6.6% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 11.3%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Salesforce's return on equity of 19.4% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -1.2%.

Earnings grew over 5 years

Net income grew 12.9% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 22.0% over the last twelve months, against a 5-year average of 10.5%.

Net margin above the industry

Salesforce's net margin of 22.0% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -4.8%.

High debt

Debt is 102% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 6.5% five years ago to 102%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 40.1% of total debt.

Interest well covered

Operating income covers interest expense 8.9 times.

Short-term assets don't cover short-term debts

Current assets are 0.84 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.47; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Salesforce paid dividends worth 0.8% of the share price over the last twelve months.

Yield below Treasuries

The 0.8% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Salesforce yields 0.8%.

Dividend stability

Fewer than five years of dividend history.

Covered by earnings

Dividends take 15.7% of net income.

Covered by free cash flow

Dividends take 10.0% of free cash flow.