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

Zacks Equity Research

In the latest trading session, Adobe Systems (ADBE) closed at $284.60, marking a +0.76% move from the previous day. This move lagged the S&P 500's daily gain of 1.08%. Meanwhile, the Dow gained 0.91%, and the Nasdaq, a tech-heavy index, added 1.31%.

Prior to today's trading, shares of the software maker had lost 1.31% over the past month. This has was narrower than the Computer and Technology sector's loss of 1.68% and lagged the S&P 500's loss of 0.68% in that time.

ADBE will be looking to display strength as it nears its next earnings release, which is expected to be September 17, 2019. On that day, ADBE is projected to report earnings of $1.97 per share, which would represent year-over-year growth of 13.87%. Meanwhile, our latest consensus estimate is calling for revenue of $2.81 billion, up 22.66% from the prior-year quarter.

ADBE's full-year Zacks Consensus Estimates are calling for earnings of $7.81 per share and revenue of $11.17 billion. These results would represent year-over-year changes of +15.53% and +23.66%, respectively.

Investors should also note any recent changes to analyst estimates for ADBE. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 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 remained stagnant. ADBE is currently a Zacks Rank #3 (Hold).

Looking at its valuation, ADBE is holding a Forward P/E ratio of 36.15. This valuation marks a premium compared to its industry's average Forward P/E of 29.27.

Investors should also note that ADBE has a PEG ratio of 2.07 right now. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.02 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 50, which puts it in the top 20% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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