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Adobe Systems (ADBE) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Adobe Systems (ADBE - Free Report) closed at $434.89, marking a -0.8% move from the previous day. This change lagged the S&P 500's 0.07% loss on the day. Elsewhere, the Dow gained 0.08%, while the tech-heavy Nasdaq lost 0.04%.

Heading into today, shares of the software maker had gained 17.87% over the past month, outpacing the Computer and Technology sector's gain of 8.42% and the S&P 500's gain of 8.06% in that time.

Investors will be hoping for strength from Adobe Systems as it approaches its next earnings release. On that day, Adobe Systems is projected to report earnings of $3.33 per share, which would represent year-over-year growth of 7.07%. Meanwhile, our latest consensus estimate is calling for revenue of $4.44 billion, up 12.71% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $13.51 per share and revenue of $17.68 billion. These totals would mark changes of +8.25% and +12.03%, respectively, from last year.

Any recent changes to analyst estimates for Adobe Systems should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Adobe Systems currently has a Zacks Rank of #3 (Hold).

Investors should also note Adobe Systems's current valuation metrics, including its Forward P/E ratio of 32.45. This represents a premium compared to its industry's average Forward P/E of 28.51.

Meanwhile, ADBE's PEG ratio is currently 1.96. 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 industry currently had an average PEG ratio of 2.25 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 168, putting it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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