Adobe Inc (ADBE.CA) Stock Fundamental Analysis

Canada • Toronto Stock Exchange • TSX:ADBE

11.37 CAD

+0.05 (+0.44%)

Last: Jan 30, 2026, 07:00 PM

Fundamental Rating

Overall ADBE gets a fundamental rating of 7 out of 10. We evaluated ADBE against 66 industry peers in the Software industry. ADBE gets an excellent profitability rating and is at the same time showing great financial health properties. ADBE is valued quite cheap, while showing a decent growth score. This is a good combination! This makes ADBE very considerable for value and quality investing!

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1. Profitability

1.1 Basic Checks

In the past year ADBE was profitable.
In the past year ADBE had a positive cash flow from operations.
In the past 5 years ADBE has always been profitable.
In the past 5 years ADBE always reported a positive cash flow from operatings.

1.2 Ratios

ADBE's Return On Assets of 24.17% is amongst the best of the industry. ADBE outperforms 98.48% of its industry peers.
ADBE's Return On Equity of 61.34% is amongst the best of the industry. ADBE outperforms 98.48% of its industry peers.
ADBE has a better Return On Invested Capital (36.51%) than 98.48% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ADBE is significantly above the industry average of 12.50%.
The last Return On Invested Capital (36.51%) for ADBE is above the 3 year average (31.10%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	24.17%
ROE	61.34%
ROIC	36.51%

ROA(3y)20.26%

ROA(5y)19.2%

ROE(3y)44.54%

ROE(5y)40.01%

ROIC(3y)31.1%

ROIC(5y)28.47%

1.3 Margins

ADBE's Profit Margin of 30.00% is amongst the best of the industry. ADBE outperforms 96.97% of its industry peers.
In the last couple of years the Profit Margin of ADBE has declined.
ADBE's Operating Margin of 36.63% is amongst the best of the industry. ADBE outperforms 98.48% of its industry peers.
ADBE's Operating Margin has been stable in the last couple of years.
Looking at the Gross Margin, with a value of 89.27%, ADBE belongs to the top of the industry, outperforming 93.94% of the companies in the same industry.
ADBE's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	36.63%
PM (TTM)	30%
GM	89.27%

OM growth 3Y1.88%

OM growth 5Y1.28%

PM growth 3Y3.55%

PM growth 5Y-6%

GM growth 3Y0.59%

GM growth 5Y0.6%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ADBE is creating value.
Compared to 1 year ago, ADBE has less shares outstanding
ADBE has less shares outstanding than it did 5 years ago.
ADBE has a worse debt/assets ratio than last year.

2.2 Solvency

ADBE has an Altman-Z score of 4.05. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 4.05, ADBE is doing good in the industry, outperforming 72.73% of the companies in the same industry.
ADBE has a debt to FCF ratio of 0.63. This is a very positive value and a sign of high solvency as it would only need 0.63 years to pay back of all of its debts.
ADBE has a better Debt to FCF ratio (0.63) than 83.33% of its industry peers.
A Debt/Equity ratio of 0.53 indicates that ADBE is somewhat dependend on debt financing.
The Debt to Equity ratio of ADBE (0.53) is comparable to the rest of the industry.
Even though the debt/equity ratio score it not favorable for ADBE, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.53
Debt/FCF	0.63
Altman-Z	4.05

ROIC/WACC3.92

WACC9.31%

2.3 Liquidity

A Current Ratio of 1.00 indicates that ADBE may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.00, ADBE is in line with its industry, outperforming 43.94% of the companies in the same industry.
A Quick Ratio of 1.00 indicates that ADBE may have some problems paying its short term obligations.
ADBE has a Quick ratio (1.00) which is comparable to the rest of the industry.
The current and quick ratio evaluation for ADBE is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

		Industry Rank	Sector Rank
Current Ratio	1
Quick Ratio	1

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 13.74% over the past year.
ADBE shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.87% yearly.
Looking at the last year, ADBE shows a quite strong growth in Revenue. The Revenue has grown by 10.53% in the last year.
ADBE shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 13.06% yearly.

EPS 1Y (TTM)13.74%

EPS 3Y15.15%

EPS 5Y15.87%

EPS Q2Q%14.35%

Revenue 1Y (TTM)10.53%

Revenue growth 3Y10.52%

Revenue growth 5Y13.06%

Sales Q2Q%10.49%

3.2 Future

The Earnings Per Share is expected to grow by 9.91% on average over the next years. This is quite good.
ADBE is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.02% yearly.

EPS Next Y14.37%

EPS Next 2Y13.61%

EPS Next 3Y12.14%

EPS Next 5Y9.91%

Revenue Next Year9.89%

Revenue Next 2Y9.49%

Revenue Next 3Y9.04%

Revenue Next 5Y8.02%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 0.40, which indicates a rather cheap valuation of ADBE.
100.00% of the companies in the same industry are more expensive than ADBE, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of ADBE to the average of the S&P500 Index (28.32), we can say ADBE is valued rather cheaply.
A Price/Forward Earnings ratio of 0.35 indicates a rather cheap valuation of ADBE.
Based on the Price/Forward Earnings ratio, ADBE is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of ADBE to the average of the S&P500 Index (25.57), we can say ADBE is valued rather cheaply.

		Industry Rank	Sector Rank
PE	0.4
Fwd PE	0.35

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, ADBE is valued cheaper than 98.48% of the companies in the same industry.
ADBE's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ADBE is cheaper than 100.00% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	0.36
EV/EBITDA	0.21

4.3 Compensation for Growth

ADBE's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of ADBE may justify a higher PE ratio.
ADBE's earnings are expected to grow with 12.14% in the coming years. This may justify a more expensive valuation.