U.S. Markets open in 5 hrs 52 mins

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 the most recent trading day at $272.03, moving +1.62% from the previous trading session. This change outpaced the S&P 500's 0.8% gain on the day. Elsewhere, the Dow gained 0.82%, while the tech-heavy Nasdaq added 1.14%.

Prior to today's trading, shares of the software maker had lost 1.66% over the past month. This has was narrower than the Computer and Technology sector's loss of 5.07% and the S&P 500's loss of 3.2% in that time.

Wall Street will be looking for positivity from ADBE as it approaches its next earnings report date. On that day, ADBE is projected to report earnings of $1.78 per share, which would represent year-over-year growth of 7.23%. Our most recent consensus estimate is calling for quarterly revenue 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.

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 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. 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 sporting a Zacks Rank of #2 (Buy).

Looking at its valuation, ADBE is holding a Forward P/E ratio of 34.26. This valuation marks a premium compared to its industry's average Forward P/E of 30.98.

We can also see that ADBE currently has a PEG ratio of 2.09. 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 industry currently had an average PEG ratio of 2.09 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 40, putting it in the top 16% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research