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

Zacks Equity Research

Adobe Systems (ADBE) closed the most recent trading day at $268.71, moving -0.81% from the previous trading session. This change lagged the S&P 500's daily gain of 2.14%. Elsewhere, the Dow gained 2.06%, while the tech-heavy Nasdaq added 2.65%.

Prior to today's trading, shares of the software maker had lost 8.68% over the past month. This has was narrower than the Computer and Technology sector's loss of 10.97% and lagged the S&P 500's loss of 6.63% 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.

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 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 a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Within the past 30 days, our consensus EPS projection remained stagnant. ADBE is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that ADBE has a Forward P/E ratio of 33.15 right now. This valuation marks a premium compared to its industry's average Forward P/E of 29.06.

It is also worth noting that ADBE currently has a PEG ratio of 2.02. 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 was holding an average PEG ratio of 2.02 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 157, which puts it in the bottom 39% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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