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Brief Commentary On Adobe Systems Incorporated’s (NASDAQ:ADBE) Fundamentals

Michael Crabtree

Adobe Systems Incorporated (NASDAQ:ADBE) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of ADBE, it is a financially-healthy company with a strong track record and a excellent future outlook. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my high-level commentary, take a look at the report on Adobe Systems here.

Flawless balance sheet with outstanding track record

Investors seeking high cash growth potential should consider ADBE, with forecasted operating cash flow growth of 50.69%. This is expected to flow down into an impressive return on equity of 30.53% over the next couple of years. ADBE delivered a bottom-line expansion of 43.26% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 21.76% return to shareholders, which is an notable feat for the company.

NasdaqGS:ADBE Future Profit Jun 14th 18

ADBE’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that ADBE manages its cash and cost levels well, which is a crucial insight into the health of the company. ADBE’s has produced operating cash levels of 1.68x total debt over the past year, which implies that ADBE’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

NasdaqGS:ADBE Historical Debt Jun 14th 18

Next Steps:

For Adobe Systems, there are three pertinent aspects you should look at:

  1. Valuation: What is ADBE 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 ADBE is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does ADBE return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from ADBE as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ADBE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.