Back to top

Image: Bigstock

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

Read MoreHide Full Article

Adobe Systems (ADBE - Free Report) closed the most recent trading day at $244.95, moving +0.99% from the previous trading session. This change outpaced the S&P 500's 0.85% gain on the day. Meanwhile, the Dow gained 0.75%, and the Nasdaq, a tech-heavy index, added 1.29%.

Prior to today's trading, shares of the software maker had gained 7.74% over the past month. This has lagged the Computer and Technology sector's gain of 11.25% and the S&P 500's gain of 12.44% in that time.

ADBE will be looking to display strength as it nears its next earnings release, which is expected to be March 21, 2019. In that report, analysts expect ADBE to post earnings of $1.61 per share. This would mark year-over-year growth of 3.87%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.54 billion, up 22.28% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.77 per share and revenue of $11.15 billion. These totals would mark changes of +14.94% and +23.44%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for ADBE. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate remained stagnant within the past month. ADBE is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note ADBE's current valuation metrics, including its Forward P/E ratio of 31.22. For comparison, its industry has an average Forward P/E of 28.37, which means ADBE is trading at a premium to the group.

Also, we should mention that ADBE has a PEG ratio of 1.9. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 1.97 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 59, putting it in the top 24% 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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Adobe Inc. (ADBE) - free report >>

Published in