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. ADBE has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. ADBE has a correct valuation and a medium growth rate. These ratings would make ADBE suitable for quality investing!
1. Profitability
1.1 Basic Checks
ADBE had positive earnings in the past year.
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 Return On Assets of 22.54%. This is amongst the best in the industry. ADBE outperforms 96.47% of its industry peers.
Looking at the Return On Equity, with a value of 51.55%, ADBE belongs to the top of the industry, outperforming 96.11% of the companies in the same industry.
The Return On Invested Capital of ADBE (30.78%) is better than 97.53% of its industry peers.
ADBE had an Average Return On Invested Capital over the past 3 years of 27.26%. This is significantly above the industry average of 12.70%.
The 3 year average ROIC (27.26%) for ADBE is below the current ROIC(30.78%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 22.54% | ||
| ROE | 51.55% | ||
| ROIC | 30.78% |
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 (30.63%) is better than 93.99% of its industry peers.
ADBE's Profit Margin has been stable in the last couple of years.
ADBE's Operating Margin of 36.29% is amongst the best of the industry. ADBE outperforms 96.47% of its industry peers.
ADBE's Operating Margin has improved in the last couple of years.
The Gross Margin of ADBE (89.15%) is better than 96.82% 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 | 36.29% | ||
| PM (TTM) | 30.63% | ||
| GM | 89.15% |
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.
The number of shares outstanding for ADBE has been reduced compared to 1 year ago.
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 9.85. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
ADBE has a Altman-Z score of 9.85. This is amongst the best in the industry. ADBE outperforms 84.81% of its industry peers.
ADBE has a debt to FCF ratio of 0.67. This is a very positive value and a sign of high solvency as it would only need 0.67 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 0.67, ADBE is doing good in the industry, outperforming 75.62% of the companies in the same industry.
A Debt/Equity ratio of 0.47 indicates that ADBE is not too dependend on debt financing.
ADBE has a worse Debt to Equity ratio (0.47) than 63.96% of its industry peers.
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 | 0.47 | ||
| Debt/FCF | 0.67 | ||
| Altman-Z | 9.85 |
ROIC/WACC2.81
WACC10.97%
2.3 Liquidity
ADBE has a Current Ratio of 1.18. This is a normal value and indicates that ADBE is financially healthy and should not expect problems in meeting its short term obligations.
ADBE's Current ratio of 1.18 is on the low side compared to the rest of the industry. ADBE is outperformed by 64.31% of its industry peers.
A Quick Ratio of 1.18 indicates that ADBE should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.18, ADBE is doing worse than 64.31% of the companies in the same 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 | 1.18 | ||
| Quick Ratio | 1.18 |
3. Growth
3.1 Past
ADBE shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.55%, which is quite good.
Measured over the past years, ADBE shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.69% on average per year.
The Revenue has grown by 10.54% in the past year. This is quite good.
The Revenue has been growing by 14.00% on average over the past years. This is quite good.
EPS 1Y (TTM)13.55%
EPS 3Y13.86%
EPS 5Y18.69%
EPS Q2Q%13.39%
Revenue 1Y (TTM)10.54%
Revenue growth 3Y10.86%
Revenue growth 5Y14%
Sales Q2Q%10.27%
3.2 Future
ADBE is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.51% yearly.
Based on estimates for the next years, ADBE will show a quite strong growth in Revenue. The Revenue will grow by 9.39% on average per year.
EPS Next Y12.75%
EPS Next 2Y12.52%
EPS Next 3Y12.52%
EPS Next 5Y11.51%
Revenue Next Year9.32%
Revenue Next 2Y9.51%
Revenue Next 3Y9.66%
Revenue Next 5Y9.39%
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
Based on the Price/Earnings ratio of 21.43, the valuation of ADBE can be described as rather expensive.
Compared to the rest of the industry, the Price/Earnings ratio of ADBE indicates a somewhat cheap valuation: ADBE is cheaper than 76.33% of the companies listed in the same industry.
ADBE is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 25.82, which is the current average of the S&P500 Index.
ADBE is valuated rather expensively with a Price/Forward Earnings ratio of 17.48.
Based on the Price/Forward Earnings ratio, ADBE is valued a bit cheaper than the industry average as 78.45% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 21.76. ADBE is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.43 | ||
| Fwd PE | 17.48 |
4.2 Price Multiples
81.98% of the companies in the same industry are more expensive than ADBE, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, ADBE is valued cheaply inside the industry as 81.63% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.9 | ||
| EV/EBITDA | 19.71 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of ADBE may justify a higher PE ratio.
ADBE's earnings are expected to grow with 12.52% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.68
PEG (5Y)1.15
EPS Next 2Y12.52%
EPS Next 3Y12.52%
5. Dividend
5.1 Amount
ADBE does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
407.69
-6.64 (-1.6%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners85.27%
Inst Owner Change-0.32%
Ins Owners0.16%
Ins Owner Change3.88%
Market Cap173.76B
Analysts80
Price Target508.84 (24.81%)
Short Float %2.21%
Short Ratio2.3
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)2
Avg EPS beat(2)0.66%
Min EPS beat(2)0.18%
Max EPS beat(2)1.15%
EPS beat(4)4
Avg EPS beat(4)0.51%
Min EPS beat(4)0.06%
Max EPS beat(4)1.15%
EPS beat(8)8
Avg EPS beat(8)0.69%
EPS beat(12)10
Avg EPS beat(12)0.56%
EPS beat(16)12
Avg EPS beat(16)0.66%
Revenue beat(2)0
Avg Revenue beat(2)-0.88%
Min Revenue beat(2)-0.99%
Max Revenue beat(2)-0.78%
Revenue beat(4)0
Avg Revenue beat(4)-1.16%
Min Revenue beat(4)-1.65%
Max Revenue beat(4)-0.78%
Revenue beat(8)0
Avg Revenue beat(8)-1.25%
Revenue beat(12)0
Avg Revenue beat(12)-1.36%
Revenue beat(16)1
Avg Revenue beat(16)-1.2%
PT rev (1m)-5.75%
PT rev (3m)-13.99%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)-0.68%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)-0.22%
Revenue NQ rev (1m)-0.02%
Revenue NQ rev (3m)-0.1%
Revenue NY rev (1m)-0.16%
Revenue NY rev (3m)-0.23%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.43 | ||
| Fwd PE | 17.48 | ||
| P/S | 7.88 | ||
| P/FCF | 18.9 | ||
| P/OCF | 18.56 | ||
| P/B | 13.27 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.71 |
EPS(TTM)19.02
EY4.67%
EPS(NY)23.32
Fwd EY5.72%
FCF(TTM)21.57
FCFY5.29%
OCF(TTM)21.97
OCFY5.39%
SpS51.71
BVpS30.73
TBVpS-0.91
PEG (NY)1.68
PEG (5Y)1.15
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 22.54% | ||
| ROE | 51.55% | ||
| ROCE | 38.46% | ||
| ROIC | 30.78% | ||
| ROICexc | 47.91% | ||
| ROICexgc | N/A | ||
| OM | 36.29% | ||
| PM (TTM) | 30.63% | ||
| GM | 89.15% | ||
| FCFM | 41.71% |
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-Score8
Asset Turnover0.74
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.47 | ||
| Debt/FCF | 0.67 | ||
| Debt/EBITDA | 0.69 | ||
| Cap/Depr | 19.95% | ||
| Cap/Sales | 0.78% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 105.7% | ||
| Profit Quality | 136.16% | ||
| Current Ratio | 1.18 | ||
| Quick Ratio | 1.18 | ||
| Altman-Z | 9.85 |
F-Score8
WACC10.97%
ROIC/WACC2.81
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)13.55%
EPS 3Y13.86%
EPS 5Y18.69%
EPS Q2Q%13.39%
EPS Next Y12.75%
EPS Next 2Y12.52%
EPS Next 3Y12.52%
EPS Next 5Y11.51%
Revenue 1Y (TTM)10.54%
Revenue growth 3Y10.86%
Revenue growth 5Y14%
Sales Q2Q%10.27%
Revenue Next Year9.32%
Revenue Next 2Y9.51%
Revenue Next 3Y9.66%
Revenue Next 5Y9.39%
EBIT growth 1Y14.72%
EBIT growth 3Y10.09%
EBIT growth 5Y17.62%
EBIT Next Year16.13%
EBIT Next 3Y11.14%
EBIT Next 5Y9.86%
FCF growth 1Y25.59%
FCF growth 3Y4.59%
FCF growth 5Y14.35%
OCF growth 1Y20.64%
OCF growth 3Y3.67%
OCF growth 5Y12.75%