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

Zacks Equity Research

Adobe Systems (ADBE) closed at $287.40 in the latest trading session, marking a -0.65% move from the prior day. This move lagged the S&P 500's daily gain of 0.07%. Meanwhile, the Dow 0%, and the Nasdaq, a tech-heavy index, lost 0.29%.

Heading into today, shares of the software maker had gained 6.82% over the past month, outpacing the Computer and Technology sector's gain of 5.79% and the S&P 500's gain of 4.3% in that time.

ADBE will be looking to display strength as it nears its next earnings release. On that day, ADBE is projected to report earnings of $2.26 per share, which would represent year-over-year growth of 23.5%. Our most recent consensus estimate is calling for quarterly revenue of $2.97 billion, up 20.49% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.84 per share and revenue of $11.15 billion, which would represent changes of +15.98% and +23.49%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for ADBE. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 has moved 0.06% higher. ADBE currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, ADBE is holding a Forward P/E ratio of 36.91. Its industry sports an average Forward P/E of 30.68, so we one might conclude that ADBE is trading at a premium comparatively.

Also, we should mention that ADBE has a PEG ratio of 2.27. 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 2.25 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 30, which puts it in the top 12% 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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