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Adobe Systems (ADBE) Gains But Lags Market: What You Should Know

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In the latest trading session, Adobe Systems (ADBE - Free Report) closed at $535.98, marking a +0.31% move from the previous day. The stock lagged the S&P 500's daily gain of 0.69%. Elsewhere, the Dow gained 0.78%, while the tech-heavy Nasdaq added 0.28%.

Heading into today, shares of the software maker had lost 5.33% over the past month, outpacing the Computer and Technology sector's loss of 8.19% and lagging the S&P 500's loss of 5.29% in that time.

Investors will be hoping for strength from Adobe Systems as it approaches its next earnings release. In that report, analysts expect Adobe Systems to post earnings of $3.34 per share. This would mark year-over-year growth of 6.37%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.23 billion, up 8.34% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $13.72 per share and revenue of $17.89 billion. These totals would mark changes of +9.94% and +13.35%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for Adobe Systems. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. Adobe Systems is currently sporting a Zacks Rank of #5 (Strong Sell).

Digging into valuation, Adobe Systems currently has a Forward P/E ratio of 38.96. For comparison, its industry has an average Forward P/E of 35.23, which means Adobe Systems is trading at a premium to the group.

Also, we should mention that ADBE has a PEG ratio of 2.26. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Software industry currently had an average PEG ratio of 2.7 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 93, putting it in the top 37% 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.

To follow ADBE in the coming trading sessions, be sure to utilize Zacks.com.


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