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What Are Analysts Saying About Adobe Inc.'s (NASDAQ:ADBE) Future?

Simply Wall St

After Adobe Inc.'s (NASDAQ:ADBE) earnings announcement on 01 March 2019, analysts seem cautiously bearish, with earnings expected to grow by 14% in the upcoming year against the higher past 5-year average growth rate of 44%. Currently with trailing-twelve-month earnings of US$2.6b, we can expect this to reach US$3.0b by 2020. Below is a brief commentary on the longer term outlook the market has for Adobe. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Adobe

How will Adobe perform in the near future?

Longer term expectations from the 27 analysts covering ADBE’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of ADBE's earnings growth over these next few years.

NasdaqGS:ADBE Past and Future Earnings, April 16th 2019

By 2022, ADBE's earnings should reach US$4.6b, from current levels of US$2.6b, resulting in an annual growth rate of 19%. This leads to an EPS of $9.75 in the final year of projections relative to the current EPS of $5.28. In 2022, ADBE's profit margin will have expanded from 29% to 31%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Adobe, there are three fundamental aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Adobe worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Adobe is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Adobe? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.