On the four Ms, Salesforce Inc. earns 73 for management and 89 for moat. The management score rests on a return on invested capital of 8.8% and a gross margin of 77.7% — figures that describe a business earning a respectable return on what it employs. Debt sits at 0.29x equity. The wide moat and strong management are not the same judgement, and the gap between them is where the argument about this business sits.
Three independent anchors set the price worth paying. Growth is modelled at 14.3% a year, the rate measured from the filings. The exit multiple assumed is 28.7x. That produces an intrinsic value of $296.55, a 10-CAP price of $186.76 and a payback time price of $286.06, with the value zone set at the highest of the three, $286.06. Today's price of $236.69 sits inside that zone.
A business scoring this well, trading inside its value zone, is the combination the framework exists to find — which is also the reason to check why the market disagrees. A margin of safety score of 63 describes the cushion, not the certainty.
| Price | $236.69 |
| Market cap | $193.8B |
| P/E ratio | 21.6x |
| Return on invested capital | 8.8% |
| Gross margin | 77.7% |
| Debt to equity | 0.29x |
| Free cash flow yield | 7.1% |
| Growth rate used | 14.3% |
| Growth rate measured | 14.0% |
| Exit multiple assumed | 28.7x |
| Company | Moat | Buy price |
| Shopify (SHOP) | 79 | $28.70 |
| ServiceNow Inc. (NOW) | 100 | $73.04 |
| Uber Technologies (UBER) | 85 | $78.60 |
| Automatic Data Processing (ADP) | 83 | $145.49 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Salesforce Inc. rather than accepting ours.