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Adobe Systems Inc. (ADBE - Analyst Report) is set to report third-quarter 2013 results on Sep 17. Last quarter, it posted a 14.3% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Adobe’s second-quarter earnings of 24 cents were above the Zacks Consensus Estimate due to higher revenues and solid cost management. Revenues were up sequentially and within management’s guidance range due to the increased adoption of Adobe’s Creative Cloud. Margin expansion was limited due to the change in sales mix, which favored lower-margin products.

Adobe provided a weak outlook for the third quarter, with revenues expected to decrease 1.1% sequentially. Adobe expects non-GAAP earnings per share in the range of 29 cents–35 cents, above the Zacks Consensus Estimate of 21 cents.

Earnings Whispers?

The Zacks Consensus Estimate for the third quarter stands at 21 cents while that for fiscal 2013 stands at 93 cents.

Adobe has beaten estimates in three out of the last four quarters while missing once. There were no estimate revisions for either the third quarter or fiscal 2013 over the past 30 days. As a result, the Zacks Consensus Estimate for both the periods remain unchanged. The stock carries a Zacks Rank #3 (Hold).

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Other stocks that have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 are:


Micron Tech (MU - Analyst Report), Earnings ESP of +27.27% and a Zacks Rank #1 (Strong Buy)           

Synnex Corp (SNX - Snapshot Report), Earnings ESP of +2.11% and a Zacks Rank #2 (Buy)

CarMax Inc.  (KMX - Analyst Report), Earnings ESP of +1.79% and a Zacks Rank #2 (Buy)

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