Salesforce Valuation Discount Worsens as Growth Concerns Mount

Salesforce (CRM) stock has seen a significant valuation discount in recent times, trading at around 20.6 times earnings, which is lower than the S&P 500 median of 22.6.

The company's revenue over the trailing twelve months was $43.94 billion, up 11.2%, and its three-year average revenue growth rate is ahead of the S&P 500 median at 9.9% a year.

However, Salesforce's free cash flow growth is expected to lag behind revenue growth, with management guiding for 4-5% growth in fiscal 2027 compared to an 11-12% revenue growth forecast.

The company's acquisition of Contentful and Fin is expected to contribute around $200 million to its revenue, but it remains to be seen whether Salesforce can maintain its growth momentum without these deals.