ADBE gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. ADBE has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. ADBE is valued quite cheap, while showing a decent growth score. This is a good combination! These ratings would make ADBE suitable 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.
In the past 5 years ADBE has always been profitable.
ADBE had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

The Return On Assets of ADBE (24.17%) is better than 97.48% of its industry peers.
The Return On Equity of ADBE (61.34%) is better than 97.48% of its industry peers.
ADBE has a Return On Invested Capital of 36.51%. This is amongst the best in the industry. ADBE outperforms 97.84% 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 10.76%.
The 3 year average ROIC (31.10%) for ADBE is below the current ROIC(36.51%), indicating increased profibility in the last year.

		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

ADBE has a Profit Margin of 30.00%. This is amongst the best in the industry. ADBE outperforms 89.93% of its industry peers.
In the last couple of years the Profit Margin of ADBE has declined.
ADBE has a Operating Margin of 36.63%. This is amongst the best in the industry. ADBE outperforms 94.60% of its industry peers.
In the last couple of years the Operating Margin of ADBE has remained more or less at the same level.
ADBE's Gross Margin of 89.27% is amongst the best of the industry. ADBE outperforms 95.68% of its industry peers.
In the last couple of years the Gross Margin of ADBE has remained more or less at the same level.

		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

ADBE has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it 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.
The debt/assets ratio for ADBE is higher compared to a year ago.

2.2 Solvency

ADBE has an Altman-Z score of 8.21. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ADBE (8.21) is better than 85.61% 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.
ADBE has a better Debt to FCF ratio (0.63) than 78.06% of its industry peers.
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.
Even though the debt/equity ratio score it not favorable for ADBE, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.53
Debt/FCF	0.63
Altman-Z	8.21

ROIC/WACC3.31

WACC11.03%

2.3 Liquidity

A Current Ratio of 1.00 indicates that ADBE may have some problems paying its short term obligations.
The Current ratio of ADBE (1.00) is worse 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's Quick ratio of 1.00 is on the low side compared to the rest of the industry. ADBE is outperformed by 73.38% 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
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.
ADBE shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.87% yearly.
The Revenue has grown by 10.53% in the past year. This is quite good.
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

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 14.55, which indicates a correct valuation of ADBE.
ADBE's Price/Earnings ratio is rather cheap when compared to the industry. ADBE is cheaper than 82.01% of the companies in the same industry.
When comparing the Price/Earnings ratio of ADBE to the average of the S&P500 Index (27.25), we can say ADBE is valued slightly cheaper.
A Price/Forward Earnings ratio of 12.72 indicates a correct valuation of ADBE.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ADBE indicates a rather cheap valuation: ADBE is cheaper than 83.81% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.98. ADBE is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	14.55
Fwd PE	12.72

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ADBE indicates a rather cheap valuation: ADBE is cheaper than 84.17% of the companies listed in the same industry.
87.77% of the companies in the same industry are more expensive than ADBE, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	12.95
EV/EBITDA	13.23

4.3 Compensation for Growth

ADBE's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct 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.