CRM
Salesforce, Inc.
$166.11
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 48.8% below fair value
You pay
$166.11
Bear
$222.82
Fair
$324.23
Bull
$429.54
Bear
$222.82
+34.1%
7% stage 1 growth, 11% discount
Fair
$324.23
+95.2%
12% stage 1 growth, 11% discount
Bull
$429.54
+158.6%
16% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (12% base case)
Terminal Value % of EV
41%
Implied Market Multiple
12.2x
Market is pricing in (growth)
2.3%
vs 12.2% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $265.75 from 97 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $324.23 per share.
Warnings
Stock-based employee pay equals 47% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $265.75 (from 97 analysts). Our estimate is 34% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions