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Adobe Systems (ADBE) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
PepsiCo (PEP) closed at $132.06 in the latest trading session, marking a -0.35% move from the prior day.

Adobe Systems (ADBE) closed at $283.66 in the latest trading session, marking a -0.67% move from the prior day. This move lagged the S&P 500's daily loss of 0.45%. Elsewhere, the Dow lost 0.25%, while the tech-heavy Nasdaq lost 0.5%.

Prior to today's trading, shares of the software maker had gained 6.6% over the past month. This has outpaced the Computer and Technology sector's gain of 2.84% and the S&P 500's gain of 2.62% in that time.

Wall Street will be looking for positivity from ADBE as it approaches its next earnings report date. In that report, analysts expect ADBE to post earnings of $1.78 per share. This would mark year-over-year growth of 7.23%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.70 billion, up 22.99% from the year-ago period.

ADBE's full-year Zacks Consensus Estimates are calling for earnings of $7.81 per share and revenue of $11.15 billion. These results would represent year-over-year changes of +15.53% and +23.45%, respectively.

Any recent changes to analyst estimates for ADBE should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ADBE is currently a Zacks Rank #3 (Hold).

Digging into valuation, ADBE currently has a Forward P/E ratio of 36.55. This valuation marks a premium compared to its industry's average Forward P/E of 32.96.

We can also see that ADBE currently has a PEG ratio of 2.23. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ADBE's industry had an average PEG ratio of 2.27 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 36, which puts it in the top 15% 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.

To follow ADBE in the coming trading sessions, be sure to utilize Zacks.com.


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