Key Takeaways:
- The 2-Minute Valuation Model values Salesforce stock at $352 per share in 2 years.
- That’s a potential 28% upside from today’s price of $276 per share.
- As AI initiatives drive growth, Salesforce is projected to grow EPS by 43% over the next 3 years.
- CRM stock is trading at historically low multiples despite being the dominant CRM platform leader.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
Salesforce (CRM) is the world’s leading customer relationship management platform, offering cloud-based solutions that enable businesses to manage sales, marketing, customer service, and analytics effectively.
As the pioneer and dominant player in the CRM market, Salesforce has consistently evolved its platform to incorporate cutting-edge technologies, with AI and automation becoming central to its growth strategy.
With CRM stock now trading at $276 per share, Salesforce presents a compelling value opportunity for investors seeking exposure to the enterprise software leader at historically attractive multiples following significant compression in recent years.
Let’s examine why this cloud computing giant could deliver solid returns as AI integration drives renewed growth and margins expand.
Find the best stocks to buy today with TIKR. (It’s free) >>>
What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why Salesforce Stock Looks Undervalued
Forecast
Based on analyst estimates shown in the EPS chart, Salesforce is expected to achieve steady earnings growth over the next three years, benefiting from AI integration and operational improvements.
EPS is projected to grow from $10.20 in 2025 to $14.61 by 2028, representing a solid 43% increase in total. The growth trajectory shows initial moderation followed by acceleration, with 2026 expected to deliver 10% growth, followed by more substantial 12% growth in 2027, and robust 16% growth in 2028.
This earnings growth for CRM stock is likely to be driven by:
- AI platform monetization: Salesforce’s Einstein AI and new generative AI features are creating additional revenue streams.
- Operational efficiency: Continued focus on margin expansion and cost optimization following recent restructuring.
- Market expansion: Growing adoption of CRM solutions across new industries and geographies.
- Platform integration: Cross-selling opportunities across Salesforce’s comprehensive suite of business applications.
For our valuation, we’ll estimate that CRM will reach $14.50 in EPS in fiscal 2028.
Check out Salesforce’s full analyst estimates (It’s free) >>>
Is CRM Stock Undervalued Right Now?
Salesforce stock trades at around 25x forward earnings, which is below its 10-year historical average P/E of 55x, as shown in the valuation chart.
Salesforce is grappling with a deceleration in revenue and earnings growth, resulting in compression of its multiples.
For our valuation, we’ll use a forward P/E multiple of 24x. This is below the company’s historical average, which acknowledges its slowing growth profile.
Fair Value of CRM Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $14.50
- Conservative forward P/E multiple: 24x
- Expected dividends over the next 2 years: $4
Expected Normalized EPS ($14.50) * Forward P/E ratio (24x) + Expected Dividends ($4) = Expected Share Price ($352)
The 2-year expected CRM stock price we would get from this valuation is $352 per share.
Salesforce stock is currently trading at around $276 per share, which implies a potential upside of 28% over the next two years or a 13% annualized return.
CRM stock is well-positioned to deliver outsized gains to shareholders, given that the broader markets’ average annual returns have been around 10%.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
Value stocks quicker with TIKR (It’s free, no card required) >>>
What is Analysts’ Target Price for CRM Stock?
Analysts think that Salesforce stock could have strong upside today.
Analysts have an average price target of around $362 per share for CRM stock, indicating they see about 31% upside today for the chip maker based on its current share price.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact CRM’s growth trajectory:
- Economic sensitivity: Enterprise software spending could be impacted by economic downturns or corporate budget constraints.
- Competition intensification: Microsoft, Oracle, and other tech giants are aggressively pursuing CRM market share.
- AI execution risk: Successful monetization of AI features requires flawless execution and customer adoption.
- Growth deceleration: As a mature platform, maintaining high growth rates becomes increasingly challenging.
TIKR Takeaway
Salesforce presents a compelling value opportunity at current levels. The tech stock’s upside potential is driven by a dominant position in the CRM market, successful AI integration initiatives, and historically attractive valuation multiples that provide significant downside protection.
While CRM faces the typical challenges of a mature enterprise software company, its market-leading position, comprehensive platform ecosystem, and focus on AI-driven innovation position it well for sustained growth.
Investors seeking exposure to a quality enterprise software leader at attractive valuations should find Salesforce compelling. The combination of steady earnings growth, margin expansion potential, and compressed multiples creates a balanced risk-reward proposition for long-term investors.
Is CRM stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
