Shares of Adobe ADBE have soared roughly 40% over the last year to outpace the larger software-as-a-service industry's average climb. The company is also coming off a fiscal third quarter that saw it post record quarterly revenues. So, let's see why Adobe stock appears to be a buy ahead of its upcoming earnings release Thursday.
Adobe grew into a multibillion-dollar powerhouse mostly through its suite of creative software, from Photoshop to InDesign. The San Jose-based firm has expanded its reach through its cloud-based marketing solutions, which help it compete against the likes of Salesforce CRM and VMware VMW as part of the larger SaaS industry that includes Oracle ORCL .
Last quarter, Adobe's revenues climbed 24% from the year-ago period to reach a new company record of $2.29 billion. Plus, the tech company's cash flow from operations hit $955 million. "Students, creatives, enterprises and governments trust Creative Cloud, Document Cloud and Experience Cloud to create and deliver the transformative digital experiences required to compete today," CEO Shantanu Narayen said in a company statement.
Moving on, investors can see that shares of ADBE have soared over the last five years. Adobe has not only crushed its industry's average climb and the S&P 500's 52% jump, the creative-focused software firm even outpaced Amazon AMZN over this stretch. We should note that Adobe stock is down roughly 9% over last the three months as part of the larger market pullback driven by Apple AAPL , Facebook FB , and other giants.
Shares of ADBE also dropped roughly 4% to $240.73 per share through early afternoon trading Friday. This marked a 13% downturn from its 52-week high of $277.61 a share, and sets up what could prove to be a solid buying opportunity for those high on Adobe.
Outlook & Earnings Trends
Looking ahead, Adobe's quarterly revenues are projected to surge 20.8% to touch $2.42 billion, based on our current Zacks Consensus Estimate. Meanwhile, at the other end of the income statement, the company's adjusted quarterly earnings are expected to skyrocket 49.2% to reach $1.88 per share. We should note that the company's earnings soared 57% last quarter and hit $1.73 a share.
Maybe more importantly, the company's earnings revisions have trended in the right direction recently, with the most positivity focused on Adobe's following fiscal year EPS outlook.
Adobe is currently a Zacks Rank #2 (Buy) largely based on its recent positive earnings estimate revisions. The company has also topped our quarterly earnings estimates in the trailing four quarters. Plus, Salesforce and VMware both posted solid quarters not too long ago.
Adobe is scheduled to release its fiscal Q4 earnings results after the closing bell on Thursday, December 13.
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