ADOBE INC (ADBE) Stock Fundamental Analysis
NASDAQ:ADBE - Nasdaq - US00724F1012 - Common Stock - Currency: USD
Taking everything into account, ADBE scores 7 out of 10 in our fundamental rating. ADBE was compared to 283 industry peers in the Software industry. Both the health and profitability get an excellent rating, making ADBE a very profitable company, without any liquidiy or solvency issues. A decent growth rate in combination with a cheap valuation! Better keep an eye on ADBE. These ratings would make ADBE suitable for value and quality investing!
1. Profitability
1.1 Basic Checks
In the past year ADBE was profitable.
ADBE had a positive operating cash flow in the past year.
ADBE had positive earnings in each of the past 5 years.
Each year in the past 5 years ADBE had a positive operating cash flow.
1.2 Ratios
ADBE has a better Return On Assets (24.44%) than 96.82% of its industry peers.
With an excellent Return On Equity value of 60.00%, ADBE belongs to the best of the industry, outperforming 96.82% of the companies in the same industry.
ADBE has a Return On Invested Capital of 34.50%. This is amongst the best in the industry. ADBE outperforms 97.88% 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 12.00%.
The 3 year average ROIC (27.26%) for ADBE is below the current ROIC(34.50%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 24.44% | ||
| ROE | 60% | ||
| ROIC | 34.5% |
ROA(3y)18.04%
ROA(5y)18.7%
ROE(3y)35.38%
ROE(5y)35.67%
ROIC(3y)27.26%
ROIC(5y)24.7%
1.3 Margins
The Profit Margin of ADBE (30.39%) is better than 91.87% of its industry peers.
ADBE's Profit Margin has been stable in the last couple of years.
With an excellent Operating Margin value of 36.37%, ADBE belongs to the best of the industry, outperforming 94.70% of the companies in the same industry.
In the last couple of years the Operating Margin of ADBE has grown nicely.
The Gross Margin of ADBE (89.25%) is better than 96.47% of its industry peers.
In the last couple of years the Gross Margin of ADBE has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 36.37% | ||
| PM (TTM) | 30.39% | ||
| GM | 89.25% |
OM growth 3Y-0.69%
OM growth 5Y3.18%
PM growth 3Y-5.41%
PM growth 5Y-0.43%
GM growth 3Y0.32%
GM growth 5Y0.93%
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
The number of shares outstanding for ADBE has been reduced compared to 5 years ago.
ADBE has a worse debt/assets ratio than last year.
2.2 Solvency
ADBE has an Altman-Z score of 9.30. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
ADBE has a Altman-Z score of 9.30. This is amongst the best in the industry. ADBE outperforms 85.51% of its industry peers.
ADBE has a debt to FCF ratio of 0.65. This is a very positive value and a sign of high solvency as it would only need 0.65 years to pay back of all of its debts.
ADBE's Debt to FCF ratio of 0.65 is fine compared to the rest of the industry. ADBE outperforms 77.39% of its industry peers.
ADBE has a Debt/Equity ratio of 0.54. This is a neutral value indicating ADBE is somewhat dependend on debt financing.
ADBE's Debt to Equity ratio of 0.54 is on the low side compared to the rest of the industry. ADBE is outperformed by 66.08% of its industry peers.
Although ADBE does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.54 | ||
| Debt/FCF | 0.65 | ||
| Altman-Z | 9.3 |
ROIC/WACC3.07
WACC11.25%
2.3 Liquidity
ADBE has a Current Ratio of 0.99. This is a bad value and indicates that ADBE is not financially healthy enough and could expect problems in meeting its short term obligations.
ADBE has a worse Current ratio (0.99) than 73.85% of its industry peers.
A Quick Ratio of 0.99 indicates that ADBE may have some problems paying its short term obligations.
The Quick ratio of ADBE (0.99) is worse than 73.14% of its industry peers.
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 | 0.99 | ||
| Quick Ratio | 0.99 |
3. Growth
3.1 Past
ADBE shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.16%, which is quite good.
The Earnings Per Share has been growing by 18.69% on average over the past years. This is quite good.
ADBE shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 10.63%.
The Revenue has been growing by 14.00% on average over the past years. This is quite good.
EPS 1Y (TTM)13.16%
EPS 3Y13.86%
EPS 5Y18.69%
EPS Q2Q%12.95%
Revenue 1Y (TTM)10.63%
Revenue growth 3Y10.86%
Revenue growth 5Y14%
Sales Q2Q%10.62%
3.2 Future
Based on estimates for the next years, ADBE will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.04% on average per year.
Based on estimates for the next years, ADBE will show a quite strong growth in Revenue. The Revenue will grow by 8.89% on average per year.
EPS Next Y14.34%
EPS Next 2Y13.45%
EPS Next 3Y13.32%
EPS Next 5Y10.04%
Revenue Next Year9.93%
Revenue Next 2Y9.69%
Revenue Next 3Y9.62%
Revenue Next 5Y8.89%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
ADBE is valuated rather expensively with a Price/Earnings ratio of 18.42.
80.92% of the companies in the same industry are more expensive than ADBE, based on the Price/Earnings ratio.
ADBE's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.85.
Based on the Price/Forward Earnings ratio of 15.23, the valuation of ADBE can be described as correct.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ADBE indicates a rather cheap valuation: ADBE is cheaper than 86.22% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 34.98, ADBE is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.42 | ||
| Fwd PE | 15.23 |
4.2 Price Multiples
83.39% of the companies in the same industry are more expensive than ADBE, based on the Enterprise Value to EBITDA ratio.
87.63% of the companies in the same industry are more expensive than ADBE, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.23 | ||
| EV/EBITDA | 16.75 |
4.3 Compensation for Growth
ADBE's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
ADBE has an outstanding profitability rating, which may justify a higher PE ratio.
ADBE's earnings are expected to grow with 13.32% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.28
PEG (5Y)0.99
EPS Next 2Y13.45%
EPS Next 3Y13.32%
5. Dividend
5.1 Amount
No dividends for ADBE!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
361.03
+3.79 (+1.06%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners86.81%
Inst Owner Change-1.92%
Ins Owners0.16%
Ins Owner Change2.25%
Market Cap153.15B
Analysts79.57
Price Target505.01 (39.88%)
Short Float %2.46%
Short Ratio2.54
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.06%
Min EPS beat(2)-0.06%
Max EPS beat(2)0.18%
EPS beat(4)3
Avg EPS beat(4)0.48%
Min EPS beat(4)-0.06%
Max EPS beat(4)1.15%
EPS beat(8)7
Avg EPS beat(8)0.53%
EPS beat(12)10
Avg EPS beat(12)0.62%
EPS beat(16)11
Avg EPS beat(16)0.3%
Revenue beat(2)0
Avg Revenue beat(2)-0.77%
Min Revenue beat(2)-0.99%
Max Revenue beat(2)-0.56%
Revenue beat(4)0
Avg Revenue beat(4)-0.89%
Min Revenue beat(4)-1.24%
Max Revenue beat(4)-0.56%
Revenue beat(8)0
Avg Revenue beat(8)-1.2%
Revenue beat(12)0
Avg Revenue beat(12)-1.32%
Revenue beat(16)0
Avg Revenue beat(16)-1.29%
PT rev (1m)-0.85%
PT rev (3m)-0.75%
EPS NQ rev (1m)0%
EPS NQ rev (3m)1.37%
EPS NY rev (1m)0%
EPS NY rev (3m)1.38%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.38%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.55%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.42 | ||
| Fwd PE | 15.23 | ||
| P/S | 6.78 | ||
| P/FCF | 16.23 | ||
| P/OCF | 15.93 | ||
| P/B | 13.38 | ||
| P/tB | N/A | ||
| EV/EBITDA | 16.75 |
EPS(TTM)19.6
EY5.43%
EPS(NY)23.71
Fwd EY6.57%
FCF(TTM)22.25
FCFY6.16%
OCF(TTM)22.67
OCFY6.28%
SpS53.28
BVpS26.99
TBVpS-4.75
PEG (NY)1.28
PEG (5Y)0.99
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 24.44% | ||
| ROE | 60% | ||
| ROCE | 43.11% | ||
| ROIC | 34.5% | ||
| ROICexc | 46.41% | ||
| ROICexgc | 918.86% | ||
| OM | 36.37% | ||
| PM (TTM) | 30.39% | ||
| GM | 89.25% | ||
| FCFM | 41.75% |
ROA(3y)18.04%
ROA(5y)18.7%
ROE(3y)35.38%
ROE(5y)35.67%
ROIC(3y)27.26%
ROIC(5y)24.7%
ROICexc(3y)43%
ROICexc(5y)37.74%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)34.07%
ROCE(5y)30.87%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y17.87%
ROICexc growth 5Y9.83%
OM growth 3Y-0.69%
OM growth 5Y3.18%
PM growth 3Y-5.41%
PM growth 5Y-0.43%
GM growth 3Y0.32%
GM growth 5Y0.93%
F-Score7
Asset Turnover0.8
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.54 | ||
| Debt/FCF | 0.65 | ||
| Debt/EBITDA | 0.68 | ||
| Cap/Depr | 20.77% | ||
| Cap/Sales | 0.79% | ||
| Interest Coverage | 51.06 | ||
| Cash Conversion | 105.92% | ||
| Profit Quality | 137.39% | ||
| Current Ratio | 0.99 | ||
| Quick Ratio | 0.99 | ||
| Altman-Z | 9.3 |
F-Score7
WACC11.25%
ROIC/WACC3.07
Cap/Depr(3y)38.09%
Cap/Depr(5y)42.76%
Cap/Sales(3y)1.74%
Cap/Sales(5y)2.14%
Profit Quality(3y)141.67%
Profit Quality(5y)133.73%
High Growth Momentum
Growth
EPS 1Y (TTM)13.16%
EPS 3Y13.86%
EPS 5Y18.69%
EPS Q2Q%12.95%
EPS Next Y14.34%
EPS Next 2Y13.45%
EPS Next 3Y13.32%
EPS Next 5Y10.04%
Revenue 1Y (TTM)10.63%
Revenue growth 3Y10.86%
Revenue growth 5Y14%
Sales Q2Q%10.62%
Revenue Next Year9.93%
Revenue Next 2Y9.69%
Revenue Next 3Y9.62%
Revenue Next 5Y8.89%
EBIT growth 1Y13.68%
EBIT growth 3Y10.09%
EBIT growth 5Y17.62%
EBIT Next Year16.1%
EBIT Next 3Y11.11%
EBIT Next 5Y10.02%
FCF growth 1Y27.13%
FCF growth 3Y4.59%
FCF growth 5Y14.35%
OCF growth 1Y22.31%
OCF growth 3Y3.67%
OCF growth 5Y12.75%