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Adobe Systems (ADBE) Gains But Lags Market: What You Should Know


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Adobe Systems ADBE closed the most recent trading day at $262.40, moving +0.25% from the previous trading session. This move lagged the S&P 500's daily gain of 0.77%. Elsewhere, the Dow gained 1.01%, while the tech-heavy Nasdaq added 0.91%.

Prior to today's trading, shares of the software maker had lost 0.16% over the past month. This has lagged the Computer and Technology sector's gain of 0.72% and the S&P 500's gain of 2.11% in that time.

ADBE will be looking to display strength as it nears 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.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.70 per share and revenue of $8.92 billion, which would represent changes of +55.45% and +22.14%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ADBE. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ADBE is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, ADBE currently has a Forward P/E ratio of 46.65. This represents a premium compared to its industry's average Forward P/E of 41.16.

Also, we should mention that ADBE has a PEG ratio of 2.84. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Computer - Software stocks are, on average, holding a PEG ratio of 2.95 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 57, putting it in the top 22% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




This article appears in: Investing , Investing Ideas , Stocks
Referenced Symbols: ADBE



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