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

Zacks Equity Research

In the latest trading session, Adobe Systems (ADBE) closed at $375.17, marking a -0.39% move from the previous day. This change lagged the S&P 500's 1.48% gain on the day. Meanwhile, the Dow gained 2.21%, and the Nasdaq, a tech-heavy index, added 0.77%.

Investors will be hoping for strength from ADBE as it approaches its next earnings release. On that day, ADBE is projected to report earnings of $2.35 per share, which would represent year-over-year growth of 28.42%. Our most recent consensus estimate is calling for quarterly revenue of $3.17 billion, up 15.65% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.79 per share and revenue of $12.98 billion. These totals would mark changes of +24.4% and +16.19%, respectively, from last year.

Any recent changes to analyst estimates for ADBE should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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.

Valuation is also important, so investors should note that ADBE has a Forward P/E ratio of 47.07 right now. For comparison, its industry has an average Forward P/E of 44.47, which means ADBE is trading at a premium to the group.

Also, we should mention that ADBE has a PEG ratio of 2.94. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Software industry currently had an average PEG ratio of 2.94 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 130, which puts it in the bottom 49% 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.

To follow ADBE in the coming trading sessions, be sure to utilize Zacks.com.


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