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

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Adobe Systems (ADBE - Free Report) closed at $407.58 in the latest trading session, marking a +0.07% move from the prior day. The stock lagged the S&P 500's daily gain of 0.48%. At the same time, the Dow added 0.2%, and the tech-heavy Nasdaq gained 0.19%.

Heading into today, shares of the software maker had lost 13.12% over the past month, lagging the Computer and Technology sector's loss of 11.75% and the S&P 500's loss of 8.48% 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 $3.30 per share. This would mark year-over-year growth of 8.91%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.34 billion, up 13.12% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $13.58 per share and revenue of $17.83 billion. These totals would mark changes of +8.81% and +12.93%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Adobe Systems. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Adobe Systems is currently a Zacks Rank #3 (Hold).

In terms of valuation, Adobe Systems is currently trading at a Forward P/E ratio of 29.99. For comparison, its industry has an average Forward P/E of 28.95, which means Adobe Systems is trading at a premium to the group.

Investors should also note that ADBE has a PEG ratio of 1.72 right now. 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. The Computer - Software was holding an average PEG ratio of 2.28 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 164, which puts it in the bottom 36% 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.

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