Overall ADBE gets a fundamental rating of 7 out of 10. We evaluated ADBE against 278 industry peers in the Software industry. Both the health and profitability get an excellent rating, making ADBE a very profitable company, without any liquidiy or solvency issues. ADBE is valued quite cheap, while showing a decent growth score. This is a good combination! These ratings could make ADBE a good candidate for value and quality investing.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year ADBE was profitable.
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's Return On Assets of 24.17% is amongst the best of the industry. ADBE outperforms 97.48% of its industry peers.
With an excellent Return On Equity value of 61.34%, ADBE belongs to the best of the industry, outperforming 97.48% of the companies in the same industry.
ADBE's Return On Invested Capital of 36.51% is amongst the best of the industry. ADBE outperforms 97.84% of its industry peers.
ADBE had an Average Return On Invested Capital over the past 3 years of 31.10%. This is significantly above the industry average of 10.76%.
The last Return On Invested Capital (36.51%) for ADBE is above the 3 year average (31.10%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	24.17%
ROE	61.34%
ROIC	36.51%

ROA(3y)20.26%

ROA(5y)19.2%

ROE(3y)44.54%

ROE(5y)40.01%

ROIC(3y)31.1%

ROIC(5y)28.47%

1.3 Margins

With an excellent Profit Margin value of 30.00%, ADBE belongs to the best of the industry, outperforming 89.93% of the companies in the same industry.
ADBE's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 36.63%, ADBE belongs to the top of the industry, outperforming 94.60% of the companies in the same industry.
ADBE's Operating Margin has been stable in the last couple of years.
Looking at the Gross Margin, with a value of 89.27%, ADBE belongs to the top of the industry, outperforming 95.68% of the companies in the same industry.
ADBE's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	36.63%
PM (TTM)	30%
GM	89.27%

OM growth 3Y1.88%

OM growth 5Y1.28%

PM growth 3Y3.55%

PM growth 5Y-6%

GM growth 3Y0.59%

GM growth 5Y0.6%

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ROA

ROE

ROIC

Operating and Profit Margin

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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.
ADBE has less shares outstanding than it did 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 8.11. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ADBE (8.11) is better than 84.89% of its industry peers.
ADBE has a debt to FCF ratio of 0.63. This is a very positive value and a sign of high solvency as it would only need 0.63 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.63, ADBE is in the better half of the industry, outperforming 78.06% of the companies in the same industry.
ADBE has a Debt/Equity ratio of 0.53. This is a neutral value indicating ADBE is somewhat dependend on debt financing.
ADBE's Debt to Equity ratio of 0.53 is on the low side compared to the rest of the industry. ADBE is outperformed by 66.91% 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	0.53
Debt/FCF	0.63
Altman-Z	8.11

ROIC/WACC3.32

WACC11.01%

2.3 Liquidity

A Current Ratio of 1.00 indicates that ADBE may have some problems paying its short term obligations.
ADBE has a worse Current ratio (1.00) than 74.82% of its industry peers.
ADBE has a Quick Ratio of 1.00. This is a bad value and indicates that ADBE is not financially healthy enough and could expect problems in meeting its short term obligations.
ADBE has a Quick ratio of 1.00. This is in the lower half of the industry: ADBE underperforms 73.38% of its industry peers.
ADBE does not score too well on the current and quick ratio evaluation. However, as it has 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
Quick Ratio	1

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 13.74% over the past year.
The Earnings Per Share has been growing by 15.87% on average over the past years. This is quite good.
Looking at the last year, ADBE shows a quite strong growth in Revenue. The Revenue has grown by 10.53% in the last year.
Measured over the past years, ADBE shows a quite strong growth in Revenue. The Revenue has been growing by 13.06% on average per year.

EPS 1Y (TTM)13.74%

EPS 3Y15.15%

EPS 5Y15.87%

EPS Q2Q%14.35%

Revenue 1Y (TTM)10.53%

Revenue growth 3Y10.52%

Revenue growth 5Y13.06%

Sales Q2Q%10.49%

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 9.91% yearly.
ADBE is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.02% yearly.

EPS Next Y14.37%

EPS Next 2Y13.61%

EPS Next 3Y12.14%

EPS Next 5Y9.91%

Revenue Next Year9.89%

Revenue Next 2Y9.49%

Revenue Next 3Y9.04%

Revenue Next 5Y8.02%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 14.20 indicates a correct valuation of ADBE.
Compared to the rest of the industry, the Price/Earnings ratio of ADBE indicates a rather cheap valuation: ADBE is cheaper than 82.01% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 28.82. ADBE is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 12.41 indicates a correct valuation of ADBE.
Based on the Price/Forward Earnings ratio, ADBE is valued cheaply inside the industry as 84.17% of the companies are valued more expensively.
ADBE's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.95.

		Industry Rank	Sector Rank
PE	14.2
Fwd PE	12.41

4.2 Price Multiples

ADBE's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ADBE is cheaper than 84.53% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ADBE indicates a rather cheap valuation: ADBE is cheaper than 87.41% of the companies listed in the same industry.

		Industry Rank	Sector Rank
P/FCF	12.64
EV/EBITDA	12.91

4.3 Compensation for Growth

ADBE's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ADBE has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ADBE's earnings are expected to grow with 12.14% in the coming years.