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


Adobe Systems (ADBE) closed the most recent trading day at $265.37, moving +1.69% from the previous trading session. This move outpaced the S&P 500′s daily gain of 0.19%. Elsewhere, the Dow lost 0.23%, while the tech-heavy Nasdaq added 0.27%.

Coming into today, shares of the software maker had gained 2.79% in the past month. In that same time, the Computer and Technology sector lost 0.52%, while the S&P 500 gained 0.74%.

Investors will be hoping for strength from ADBE as it approaches its next earnings release, which is expected to be September 18, 2018. The company is expected to report EPS of $1.69, up 53.64% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.25 billion, up 22.05% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.70 per share and revenue of $8.92 billion. These totals would mark changes of +55.45% and +22.14%, respectively, from last year.

Any recent changes to analyst estimates for ADBE should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ADBE is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, ADBE is holding a Forward P/E ratio of 46.53. This valuation marks a premium compared to its industry’s average Forward P/E of 42.11.

Also, we should mention that ADBE has a PEG ratio of 2.84. 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. Computer – Software stocks are, on average, holding a PEG ratio of 2.98 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 61, putting it in the top 24% 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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