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Adobe Systems (ADBE) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Adobe Systems (ADBE) closed at $383.28 in the latest trading session, marking a +1.17% move from the prior day. This change outpaced the S&P 500's 0.47% gain on the day. Meanwhile, the Dow gained 0.4%, and the Nasdaq, a tech-heavy index, added 0.87%.

Prior to today's trading, shares of the software maker had gained 8.24% over the past month. This has outpaced the Computer and Technology sector's gain of 2.81% and the S&P 500's gain of 1.43% in that time.

Wall Street will be looking for positivity from ADBE as it approaches its next earnings report date. The company is expected to report EPS of $2.23, up 30.41% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $3.04 billion, up 17.04% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.80 per share and revenue of $13.15 billion, which would represent changes of +24.52% and +17.68%, respectively, from the prior year.

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Any recent changes to analyst estimates for ADBE should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ADBE is currently sporting a Zacks Rank of #2 (Buy).

In terms of valuation, ADBE is currently trading at a Forward P/E ratio of 38.66. This represents a premium compared to its industry's average Forward P/E of 33.65.

We can also see that ADBE currently has a PEG ratio of 2.38. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ADBE's industry had an average PEG ratio of 2.48 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 52, which puts it in the top 21% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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Zacks Investment Research