Should You Buy Salesforce Stock For Its Cash? Trefis Team Wed, October 7, 2026 at 7:24 PM EDT 4 min read CRM -0.19% SPGI -0.24% MSFT +0.09% NOW -0.07% ORCL -0.84% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Over the last twelve months, Salesforce (CRM) generated free cash flow equal to 8.2% of its market value. That figure compares with 4.5% for the median S&P 500 company. A yield sitting that far above the norm usually points to one of two scenarios. Either the stock is cheap, or investors expect the cash to dwindle. Before sorting out which, what do you actually get as a shareholder from that cash?
Shareholders own a proportional stake in that free cash flow, just as they own a claim on the company's profit. Free cash flow represents the capital remaining after a business pays its bills and funds its own upkeep. It ultimately belongs to shareholders, whether the company distributes it immediately or retains it. Once investors begin to recognize strong cash generation, the share price often adjusts to reflect it, particularly when that cash is growing.
Some of that cash must service lenders first. Salesforce currently carries a net debt of $30.3 billion, which equals 16.4% of its market value. When measured against the combined total of market value and net debt, the free cash flow yield sits at 7.0%.
Salesforce generates its cash by selling business software through subscriptions. In fiscal Q2 2027, subscription and support brought in $10.82 billion of the total $11.35 billion in revenue, driven primarily by strength in Slack and Agentforce. This type of software model requires very little capital. The company spent only $0.6 billion on capital projects over the last twelve months, compared with $15.8 billion in cash generated from operations. This structure left 34.5% of its revenue as free cash flow.
This cash generation has also expanded every year. Free cash flow stood at $7.6 billion three years ago and $11.5 billion two years ago. The figure then rose to $12.5 billion a year ago, climbing further to $15.2 billion over the last twelve months. Salesforce must manage its debt load from this cash pool as well. Net debt currently stands at 1.8 times EBITDA, Salesforce's yearly earnings before interest, taxes, depreciation and amortization.
The lingering concern around the stock is that the rise of AI will leave customers needing less Salesforce software. Over the past twelve months, Salesforce stock returned -5.6%, lagging well behind the S&P 500, which returned 17.8%. During the August 26 call for fiscal Q2 2027, management noted that skeptics had expected seats to decline and customers to leave.
So far, the business has continued to grow instead. Revenue rose 11.2% over the last twelve months, accelerating from the 8.3% growth recorded the year before. The operating margin reached 22% over the same twelve months. That compares with an operating margin of 21% a year ago and 19.1% two years ago. On the recent call, management noted that seats across sales, service and Slack grew year over year, with customer attrition sitting near its lowest level ever. The company also raised its fiscal 2027 revenue forecast to between $46.1 billion and $46.4 billion. Management specified that this raise includes $200 million expected from acquisitions the company had yet to close. Current evidence therefore points toward a cheap stock, as the worry has yet to materialize in the financial results.
Management takes a more modest outlook on the cash, expecting free cash flow to grow approximately 4% to 5% in fiscal 2027. Investors should note that this figure remains a forecast, not a result.
The cash and the debt are what to follow when Salesforce reports fiscal Q3 2027. If free cash flow stays on track for the 4% to 5% growth management expects for fiscal 2027, it would signal that the cash is still expanding. Additionally, net debt dropping below 1.8 times EBITDA would demonstrate Salesforce carrying its debt load more easily.
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