Consider what to do with Salesforce stock recently? you are not alone. Whether you're a long-term holder or just bypassing the stock, there are enough twists and turns lately to get everyone to stop. The stock has fallen 1.3% in the past 30 days after falling 1.3% in the past week, with a share price of $240.36, and volatility is closely linked to headlines about AI, streamlining operations and some bold bets for high-priced investments.
Salesforce has made a major migration to defense and logistics through its new MissionForce division, which shows that the company is betting on its AI and cloud expertise to unlock new revenue streams. Meanwhile, the shift to AI-driven support means that there are thousands of missing human characters. This is a dramatic cost-saving step that can increase operational efficiency and new issues regarding risk advancement. Meanwhile, long-term holders may notice a swing of emotions, but the 61.6% yield since mid-2022 is higher than 61.6%, but the start-year return is 27.3% and 16.0% pullback.
So is Salesforce undervalued now, or is the market skepticism about it justified? According to our count, the company scored 4 points in 6 valuation checks, indicating potential value here. In the next section, we will break down exactly how these valuation methods stack and suggest a more powerful way to consider the value of Salesforce before you hit the purchase or sale.
Why Salesforce lags behind peers
Method 1: Salesforce Discount Cash Flow (DCF) Analysis
Discounted Cash Flow (DCF) model estimates the value of a stock by predicting the future cash flow of a company and reversing it back to its value today. This approach can help investors measure the value of a company’s true value, focusing on expectations for long-term growth and profitability rather than short-term market sentiment.
For Salesforce, this model starts at about $12.4 billion from the current free cash flow. Analysts estimate that the next five years are covered. Simply Wall ST will further expand these forecasts, with free cash flow expected to reach nearly $19.4 billion by 2035. These forecasts take into account the company's historical growth and expected operational changes.
Based on the application of these forecasts and DCF methods, Salesforce's estimated intrinsic value is $280.22 per share. The model is at the current share price of $240.36, indicating that the stock is trading at a 14.2% discount to its calculated fair value. Salesforce stock could provide potential upside for investors if the company meets these cash flow goals, DCF said.
Results: Underestimated
Go to the Valuation section of our company report for more details on how we can get the fair value of Salesforce.
CRM cash flow discounts as of October 2025
Our Discounted Cash Flow (DCF) analysis shows that Salesforce is undervalued by 14.2%. Track this content on your surveillance list or portfolio, or discover more undervalued stocks.
Method 2: Salesforce price and income (P/E ratio analysis)
The ratio of price-to-earnings ratio (P/E) is one of the most widely used measures to evaluate profitable companies such as Salesforce. It provides a clear snapshot of what today’s investors are willing to pay for every dollar of earnings generated by the company today. For black firms, the P/E ratio helps clarify investors' expectations for future growth, profitability and business stability.
A “normal” or “fair” PE ratio may vary depending on the company’s growth prospects and perceived risks. High-growth companies or companies with lower risk tend to justify higher multiples, while slower or lower risk companies often order lower P/E ratios. For Salesforce, the current P/E ratio is 34.3 times, slightly below the software industry average of 35.7 times and far below the average of 59.1 times for its peers.
To add another layer of insight, Simply Wall ST calculates Salesforce's proprietary “fair ratio”, in which case sales Chase's revenue growth, profit margins, industry dynamics, market cap and company-specific risks are 43.9 times. This fair rate is more tailored than simple peers or industry comparisons. It provides a desire to better reflect all of Salesforce's unique properties and appearance. Since Salesforce's actual P/E ratio is higher than its fair ratio, the stock appears to trade at a discounted price, suggesting that it may be undervalued based on current fundamentals and appearance.
Results: Underestimated
New York Stock Exchange: CRM PE ratio as of October 2025
Sports ratio tells a story, but what if the real opportunity is elsewhere? Found companies that have bet on explosive growth in their insiders.
Upgrade your decision: Choose your Salesforce narrative
Earlier, we mentioned that there is a better way to understand valuations, so let’s introduce you to narrative, smarter, and more dynamic approaches to investment decisions. A narrative allows you to combine the view of Salesforce story with assumptions about future income, profits, and fair value. This creates a personalized prospect that brings together the fundamentals of the company and market sentiment. With the narrative on Simply Wall St's community page, you can easily see and build your own story, compare your fair value to your current share price, and adjust your paper as news or earnings data arrives. No spreadsheets or complex models are required.
For example, a Salesforce investor could focus on its leadership in enterprise cloud adoption, fast AI innovation and strong profitability, resulting in a high-priced $430 narrative. A more cautious user can emphasize competition growth, around the risk of acquisitions and reduce long-term growth, thus supporting the narrative fair value close to $221. The narrative gives you the tools to decide when to buy or sell, all of which update dynamically as new information emerges.
For Salesforce, we will make it very easy for you with a preview of two leading Salesforce narratives:
🐂Salesforce Bull case
Fair Value: $334.68
Market is 28.2% lower
Revenue growth rate: 9.6%
- AI-driven automation and cross-cloud workflow integration is in expanding customer adoption, increasing contract value and driving force for sustainable growth.
- Strong execution and disciplinary returns, focusing on the central market and SMB segments, are expanding Salesforce’s customer base and supporting increased margins.
- Key risks include growing competition from tech giants, regulatory challenges and integration risks from acquisitions. However, opportunities for long-term revenue and margin expansion remain intact.
🐻Salesforce Bear Case
Fair Value: $223.99
The market is 7.3% higher than fair value
Revenue growth rate: 13.0%
- As the market matures, Salesforce's core growth is slowing, and the latest efficiency gains have been captured. Future upside may depend on buybacks and capital returns.
- Reliance on large enterprise customers and moderate diversification can lead to volatility if key accounts are lost or industry competition is intensified.
- The market may overestimate the potential for sustainable growth. High profits attract competition, and AI may help and commercialize CRM products over the next five years.
Do you think there is more to Salesforce's story? Create your own narrative and let the community know!
New York Stock Exchange: CRM Community Fair Value As of October 2025
This article by Simply Wall ST is essentially general. We provide comments based on historical data, analysts use only unbiased approaches to forecasting, and our articles are not meant to be financial advice. It does not constitute a recommendation to buy or sell any shares, nor does it constitute your target or financial position. We aim to bring you long-term focus analysis driven by fundamental data. Please note that our analysis may not consider the latest price-sensitive company announcements or qualitative materials. Simple Wall ST has no place in any of the stocks mentioned.
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