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Adobe Systems (ADBE) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Adobe Systems (ADBE) closed at $289.48 in the latest trading session, marking a +1.17% move from the prior day. This change outpaced the S&P 500's 0.1% gain on the day. Elsewhere, the Dow gained 0.15%, while the tech-heavy Nasdaq lost 0.66%.

Heading into today, shares of the software maker had gained 5.13% over the past month, lagging the Computer and Technology sector's gain of 6.31% and outpacing the S&P 500's gain of 3.95% in that time.

ADBE will be looking to display strength as it nears its next earnings release. 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, our latest consensus estimate is calling for revenue of $2.70 billion, up 22.99% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.81 per share and revenue of $11.15 billion, which would represent changes of +15.53% and +23.45%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for ADBE. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. ADBE is currently a Zacks Rank #3 (Hold).

Digging into valuation, ADBE currently has a Forward P/E ratio of 36.62. This represents a premium compared to its industry's average Forward P/E of 30.85.

We can also see that ADBE currently has a PEG ratio of 2.23. 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. ADBE's industry had an average PEG ratio of 2.29 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 21, putting it in the top 9% 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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