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

Zacks Equity Research

Adobe Systems (ADBE) closed the most recent trading day at $291.72, moving +0.5% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.16%. At the same time, the Dow 0%, and the tech-heavy Nasdaq gained 0.26%.

Prior to today's trading, shares of the software maker had gained 4.5% over the past month. This has lagged the Computer and Technology sector's gain of 4.79% and outpaced the S&P 500's gain of 4.12% in that time.

Wall Street will be looking for positivity from ADBE as it approaches its next earnings report date. In that report, analysts expect ADBE to post earnings of $2.26 per share. This would mark year-over-year growth of 23.5%. Our most recent consensus estimate is calling for quarterly revenue of $2.97 billion, up 20.48% from the year-ago period.

ADBE's full-year Zacks Consensus Estimates are calling for earnings of $7.84 per share and revenue of $11.15 billion. These results would represent year-over-year changes of +15.98% and +23.49%, respectively.

Investors should also note any recent changes to analyst estimates for ADBE. 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. 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. Within the past 30 days, our consensus EPS projection has moved 0.06% higher. ADBE is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note ADBE's current valuation metrics, including its Forward P/E ratio of 37.03. Its industry sports an average Forward P/E of 29.77, so we one might conclude that ADBE is trading at a premium comparatively.

Investors should also note that ADBE has a PEG ratio of 2.28 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software was holding an average PEG ratio of 2.28 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 41, putting it in the top 17% 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.

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


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