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

In the latest trading session, Adobe Systems (ADBE) closed at $476.30, marking a +0.65% move from the previous day. This move lagged the S&P 500's daily gain of 1%. At the same time, the Dow added 1.35%, and the tech-heavy Nasdaq gained 0.6%.

Heading into today, shares of the software maker had gained 9.61% over the past month, outpacing the Computer and Technology sector's gain of 6.38% and the S&P 500's gain of 4.48% in that time.

Investors will be hoping for strength from ADBE as it approaches its next earnings release. On that day, ADBE is projected to report earnings of $2.40 per share, which would represent year-over-year growth of 17.07%. Our most recent consensus estimate is calling for quarterly revenue of $3.15 billion, up 11.24% from the year-ago period.

ADBE's full-year Zacks Consensus Estimates are calling for earnings of $9.77 per share and revenue of $12.71 billion. These results would represent year-over-year changes of +24.14% and +13.81%, respectively.

Any recent changes to analyst estimates for ADBE should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating 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.

Valuation is also important, so investors should note that ADBE has a Forward P/E ratio of 48.45 right now. Its industry sports an average Forward P/E of 35.11, so we one might conclude that ADBE is trading at a premium comparatively.

It is also worth noting that ADBE currently has a PEG ratio of 3.03. 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. The Computer - Software industry currently had an average PEG ratio of 2.55 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 79, which puts it in the top 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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.

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