Is Salesforce Inc (CRM) overvalued?
On Equity Rank's model estimate, CRM trades 11% below its fair value. Salesforce Inc (CRM) last closed at $213.65; the multi-method model fair value is $240.22.
| Price | Model fair value | Price vs model |
|---|---|---|
| $213.65 | $240.22 | 11% below |
What the answer rests on
- 6 of 10 valuation methods put CRM's value above its price and 4 put it below, so the methods disagree.
- To justify today's price, CRM's free cash flow would need to grow about 2.0% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 31.6% a year.
- CRM trades at 20.3 times its last year's earnings, against a median of 31.4 for 87 profitable Software companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 47% below to 7% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind CRM's fair value · What prices assume · Other companies