Imagine it's 2015. You've just gone to the movies to see Inside Out, and you're playing with Snapchat filters on your phone. You've also just bought $1,000 of shares in Salesforce (CRM 0.05%). Flash forward to 2025. How much is your stake worth now?
Here's the answer: $3,470. Pretty great, right? You'd have enjoyed an annualized return of 13.2%. Given the S&P 500 has delivered an annual long-term return close to 10% (ignoring inflation), that 13.2% beats the market's historical average by a wide margin.
But the S&P 500 has had a much stronger decade with an annualized gain of 12.9%, nearly matching Salesforce's performance.
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If you'd reinvested your dividends from your S&P 500 investment, you'd actually have come out ahead with an annualized total return of 14.9%, enough to turn $1,000 into just over $4,000. (Salesforce only began paying dividends in 2024.)
NYSE: CRM
Key Data Points
Still, this is all water under the bridge. What really matters is where Salesforce stock goes from here. Its current valuation certainly looks appealing with a forward price-to-earnings (P/E) ratio of 21, well below its five-year average of 27.
That valuation reflects a stock price that has fallen 27% year to date, due in part to less-than-inspiring guidance from management and worries the business may be hurt by artificial intelligence (AI) -- or at least the fear Salesforce won't be a leader with the technology.
Take a closer look at the company to see if it looks promising enough to deserve a place in your portfolio.
