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

Zacks Equity Research

Adobe Systems (ADBE) closed at $287.97 in the latest trading session, marking a +0.18% move from the prior day. This change lagged the S&P 500's 1.21% gain on the day. Meanwhile, the Dow gained 0.97%, and the Nasdaq, a tech-heavy index, added 1.35%.

Prior to today's trading, shares of the software maker had lost 7.3% over the past month. This has lagged the Computer and Technology sector's loss of 3.41% and the S&P 500's loss of 3.6% in that time.

Investors will be hoping for strength from ADBE as it approaches its next earnings release, which is expected to be September 17, 2019. The company is expected to report EPS of $1.97, up 13.87% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.81 billion, up 22.65% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.81 per share and revenue of $11.17 billion, which would represent changes of +15.53% and +23.66%, respectively, from the prior year.

Any recent changes to analyst estimates for ADBE should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ADBE is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, ADBE is holding a Forward P/E ratio of 36.79. This represents a premium compared to its industry's average Forward P/E of 29.6.

Meanwhile, ADBE's PEG ratio is currently 2.1. 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 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 73, putting it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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