Adobe Systems (ADBE) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Adobe Systems (ADBE) closed at $461.11, marking a +0.91% move from the previous day. The stock lagged the S&P 500's daily gain of 1.2%. Elsewhere, the Dow gained 0.53%, while the tech-heavy Nasdaq added 1.64%.

Prior to today's trading, shares of the software maker had lost 6.82% over the past month. This has lagged the Computer and Technology sector's loss of 1.12% and the S&P 500's loss of 2.23% in that time.

Investors will be hoping for strength from ADBE as it approaches its next earnings release. On that day, ADBE is projected to report earnings of $2.65 per share, which would represent year-over-year growth of 15.72%. Our most recent consensus estimate is calling for quarterly revenue of $3.36 billion, up 12.33% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.94 per share and revenue of $12.79 billion. These totals would mark changes of +26.3% and +14.51%, respectively, from last year.

Any recent changes to analyst estimates for ADBE should also be noted by investors. Recent revisions tend to reflect the latest 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.28% higher. ADBE is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, ADBE is currently trading at a Forward P/E ratio of 45.97. This represents a premium compared to its industry's average Forward P/E of 30.94.

We can also see that ADBE currently has a PEG ratio of 2.42. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.42 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 159, putting it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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