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

Zacks Equity Research
·3 min read

Adobe Systems (ADBE) closed at $459.47 in the latest trading session, marking a -1.81% move from the prior day. This move lagged the S&P 500's daily loss of 1.16%. At the same time, the Dow lost 1.16%, and the tech-heavy Nasdaq lost 0.82%.

Heading into today, shares of the software maker had lost 5.38% over the past month, lagging the Computer and Technology sector's gain of 2.54% and the S&P 500's gain of 3.87% in that time.

Investors will be hoping for strength from ADBE as it approaches its next earnings release. The company is expected to report EPS of $2.65, up 15.72% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $3.36 billion, up 12.33% from the year-ago period.

ADBE's full-year Zacks Consensus Estimates are calling for earnings of $9.94 per share and revenue of $12.79 billion. These results would represent year-over-year changes of +26.3% and +14.51%, respectively.

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 a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. ADBE is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, ADBE is holding a Forward P/E ratio of 47.07. For comparison, its industry has an average Forward P/E of 31.63, which means ADBE is trading at a premium to the group.

We can also see that ADBE currently has a PEG ratio of 2.48. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computer - Software was holding an average PEG ratio of 2.48 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 179, which puts it in the bottom 30% 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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Zacks Investment Research