Do You Like Cash? Consider Salesforce Stock
Salesforce (CRM) stock is 36.2% below its two-year high, set on December 4, 2024. At that price, free cash flow over the last twelve months equals 7.8% of Salesforce’s market value, against 4.5% for the median S&P 500 company. A yield that high means the business is either on sale or expected to shrink. So is Salesforce’s cash growing or shrinking?
The Business Generates Twice The Cash It Did
The cash is growing, and that matters even if none of it is paid out to you. Each share is a claim on the free cash the business produces, just as it is a claim on its profit. Cash the company keeps still belongs to its owners, and investors tend to pay more for it over time, especially when it grows.
Salesforce produced $15.2 billion of free cash flow over the last twelve months, up from $12.5 billion a year earlier. It was $11.5 billion two years ago and $7.6 billion three years ago.
The company sells software by subscription, and running that business takes little equipment. Capital spending was 4% of operating cash flow over the last twelve months. Salesforce also keeps more of each sale than it did, with an operating margin of 21.5% against 13.0% three years ago. Free cash flow was 34.5% of revenue over the last twelve months.
Some of that cash has to serve debt before it is the owners’. Salesforce’s net debt is $30.3 billion, or 15.7% of its market value. Measured against market value plus net debt, the yield is 6.8%.
Why Is Salesforce Stock Still Priced This Low?
The price appears to assume a fear management itself named on the fiscal Q2 2027 call on August 26, 2026. Skeptics, management said, expected customers to cut seats, leave, or push prices down.
Parts of the business do look slow. Marketing and commerce software brought in $5.4 billion in fiscal 2026, up 2.8% from the year before. Management said on that call that marketing showed early signs of recovery, but that it was too soon to call this a trend.
Yet the company does not report customers leaving so far. Management said on that call that attrition was near its lowest level ever. Revenue grew 11.2% over the last twelve months, against 8.3% in the twelve months before. Management said seats for its sales and service software and for Slack all grew from a year earlier. On those figures, Salesforce looks more like a business on sale than one that is shrinking.
What Should You Watch In Salesforce’s Next Report?
Watch the cash and the debt when Salesforce reports fiscal Q3 2027. Management affirmed in August its forecast that free cash flow will grow about 4% to 5% in fiscal 2027. Notably, that is much slower than the 15.8% rise in fiscal 2026, when free cash flow went from $12.4 billion to $14.4 billion. Net debt stands at 1.8 times EBITDA, the company’s earnings before interest, taxes, depreciation, and amortization.
Salesforce still has to show that its cash keeps growing and that its debt stays small against its earnings. Net debt clearly below 1.8 times EBITDA would show the company carrying its debt more easily. A fiscal 2027 free cash flow growth forecast raised above that 4% to 5% range would show Salesforce’s cash rising faster than the company planned.
How To Act On CRM?
Now you know CRM better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.
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