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 scores excellent points on both the profitability and health parts. This is a solid base for a good stock. ADBE is not valued too expensively and it also shows a decent growth rate. This makes ADBE very considerable for 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.
Each year in the past 5 years ADBE has 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 22.54% is amongst the best of 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.
ADBE's Return On Invested Capital of 30.78% is amongst the best of the industry. ADBE outperforms 97.53% 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 12.21%.
The last Return On Invested Capital (30.78%) for ADBE is above the 3 year average (27.26%), which is a sign of increasing profitability.
| 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
ADBE has a better Profit Margin (30.63%) than 93.99% of its industry peers.
ADBE's Profit Margin has been stable in the last couple of years.
ADBE has a better Operating Margin (36.29%) than 96.47% of its industry peers.
In the last couple of years the Operating Margin of ADBE has grown nicely.
ADBE has a Gross Margin of 89.15%. This is amongst the best in the industry. ADBE outperforms 96.82% of its industry peers.
ADBE's Gross Margin has been stable in the last couple of years.
| 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
ADBE has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, ADBE has less shares outstanding
Compared to 5 years ago, ADBE has less shares outstanding
The debt/assets ratio for ADBE is higher compared to a year ago.
2.2 Solvency
ADBE has an Altman-Z score of 9.90. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
ADBE's Altman-Z score of 9.90 is amongst the best of the industry. ADBE outperforms 84.45% of its industry peers.
The Debt to FCF ratio of ADBE is 0.67, which is an excellent value as it means it would take ADBE, only 0.67 years of fcf income to pay off all of its debts.
ADBE has a Debt to FCF ratio of 0.67. This is in the better half of the industry: ADBE outperforms 75.97% of its industry peers.
A Debt/Equity ratio of 0.47 indicates that ADBE is not too dependend on debt financing.
ADBE's Debt to Equity ratio of 0.47 is on the low side compared to the rest of the industry. ADBE is outperformed by 64.66% 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 | 0.47 | ||
| Debt/FCF | 0.67 | ||
| Altman-Z | 9.9 |
ROIC/WACC2.84
WACC10.83%
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.
With a Current ratio value of 1.18, ADBE is not doing good in the industry: 64.31% of the companies in the same industry are doing better.
ADBE has a Quick 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 Quick 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.
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
The Earnings Per Share has grown by an nice 13.55% over the past year.
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.
Looking at the last year, ADBE shows a quite strong growth in Revenue. The Revenue has grown by 10.54% in the last year.
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
Based on estimates for the next years, ADBE will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.51% 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 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.
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.
4. Valuation
4.1 Price/Earnings Ratio
ADBE is valuated rather expensively with a Price/Earnings ratio of 21.77.
ADBE's Price/Earnings ratio is a bit cheaper when compared to the industry. ADBE is cheaper than 75.97% of the companies in the same industry.
When comparing the Price/Earnings ratio of ADBE to the average of the S&P500 Index (26.60), we can say ADBE is valued inline with the index average.
ADBE is valuated rather expensively with a Price/Forward Earnings ratio of 17.75.
Based on the Price/Forward Earnings ratio, ADBE is valued a bit cheaper than the industry average as 79.15% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.43, ADBE is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.77 | ||
| Fwd PE | 17.75 |
4.2 Price Multiples
ADBE's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ADBE is cheaper than 81.98% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ADBE is valued cheaply inside the industry as 82.33% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.2 | ||
| EV/EBITDA | 19.87 |
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)1.71
PEG (5Y)1.16
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 |
414.03
-3.58 (-0.86%)
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 Cap176.46B
Analysts80
Price Target508.84 (22.9%)
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 | 21.77 | ||
| Fwd PE | 17.75 | ||
| P/S | 8.01 | ||
| P/FCF | 19.2 | ||
| P/OCF | 18.84 | ||
| P/B | 13.48 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.87 |
EPS(TTM)19.02
EY4.59%
EPS(NY)23.32
Fwd EY5.63%
FCF(TTM)21.57
FCFY5.21%
OCF(TTM)21.97
OCFY5.31%
SpS51.71
BVpS30.73
TBVpS-0.91
PEG (NY)1.71
PEG (5Y)1.16
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 | 9.9 |
F-Score8
WACC10.83%
ROIC/WACC2.84
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%