Back to top

Image: Bigstock

Adobe Systems (ADBE) Gains As Market Dips: What You Should Know

Read MoreHide Full Article

Adobe Systems (ADBE - Free Report) closed at $474.01 in the latest trading session, marking a +0.01% move from the prior day. This move outpaced the S&P 500's daily loss of 0.38%. Elsewhere, the Dow lost 0.5%, while the tech-heavy Nasdaq lost 0.05%.

Prior to today's trading, shares of the software maker had lost 8.96% over the past month. This has lagged the Computer and Technology sector's loss of 8.71% and the S&P 500's loss of 6.25% in that time.

Investors will be hoping for strength from Adobe Systems as it approaches its next earnings release. The company is expected to report EPS of $3.34, up 6.37% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.23 billion, up 8.34% from the prior-year quarter.

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.

Any recent changes to analyst estimates for Adobe Systems should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 a Zacks Rank #5 (Strong Sell).

Investors should also note Adobe Systems's current valuation metrics, including its Forward P/E ratio of 34.56. For comparison, its industry has an average Forward P/E of 32.01, which means Adobe Systems is trading at a premium to the group.

It is also worth noting that ADBE currently has a PEG ratio of 2. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ADBE's industry had an average PEG ratio of 2.65 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 183, which puts it in the bottom 29% 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