Salesforce Generates Strong Cash Flow: Can It Boost Shareholder Value?
Salesforce, Inc.CRM continues to generate strong cash flows, giving the company greater flexibility to reward shareholders while investing in future growth. Strong profitability, disciplined spending and stable subscription revenues are helping Salesforce maintain healthy cash generation despite headwinds from an uncertain macroeconomic environment.
In fiscal 2026, Salesforce reported operating cash flow of nearly $15 billion, up 15% year over year. Free cash flow also increased 16% to approximately $14.4 billion. These figures highlight the company’s ability to convert revenues into cash efficiently while maintaining strong margins. In fiscal 2026, the company’s revenues increased 10% year over year to $41.5 billion, while non-GAAP earnings surged 23% to $12.52 per share.
Salesforce is using this financial strength to enhance shareholder returns. During fiscal 2026, the enterprise software maker returned $14.3 billion to shareholders through share repurchases and dividends. It also expanded its share repurchase authorization to $50 billion, signaling management’s confidence in long-term business performance.
Strong cash generation also supports Salesforce’s artificial intelligence (AI) expansion strategy. The company continues to invest in products like Agentforce and Data 360, which are expected to drive future growth opportunities. Because Salesforce generates large amounts of free cash flow, it can fund these investments without placing heavy pressure on its balance sheet.
Salesforce’s strong cash flow profile strengthens its position to fund growth initiatives. If the company maintains disciplined spending while growing AI-driven businesses, shareholder value could continue improving over time.
How Competitors Fare Against Salesforce?
Microsoft CorporationMSFT remains one of Salesforce’s strongest competitors in enterprise software and cloud services. The company continues to generate massive cash flows despite heavy AI infrastructure investments.
In the first three quarters of fiscal 2026, Microsoft generated operating cash flow of $127.5 billion, up 36% from the same period of fiscal 2025. The company returned significant capital to shareholders through $19.7 billion in dividends and $17.7 billion in share repurchases during the first nine months of fiscal 2026. Strong cloud demand and AI-driven growth in products such as Microsoft Copilot and Dynamics 365 continue to support its cash-generating capabilities.
Salesforce’s another major competitor, Oracle CorporationORCL, is also strengthening shareholder returns through improving operating cash flows. In the first three quarters of fiscal 2026, Oracle generated $17.4 billion in operating cash flow, up 18% from the same period of fiscal 2025.
The company paid about $4.3 billion in dividends during the first nine months of fiscal 2026 while continuing limited share repurchases. However, Oracle’s aggressive AI and cloud infrastructure investments sharply increased capital expenditures to more than $31 billion, up from $12 billion during the same period of fiscal 2025, pressuring free cash flow. This shows that balancing shareholder returns and AI investments remains a key challenge across the software industry.
Salesforce’s Price Performance, Valuation and Estimates
Shares of Salesforce have plunged 38.7% over the past year, while the Zacks Internet – Software industry has fallen 14.7%.
Salesforce One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, CRM trades at a forward price-to-earnings ratio of 13.07, significantly below the industry’s average of 26.73.
Salesforce Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Salesforce’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 5% and 11.8%, respectively. Estimates for fiscal 2027 and 2028 have remained unchanged over the past 30 days.
Image Source: Zacks Investment Research
Salesforce currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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