ADOBE INC (ADBE)
US00724F1012 - Common Stock
We assign a fundamental rating of 7 out of 10 to ADBE. ADBE was compared to 279 industry peers in the Software industry. ADBE scores excellent points on both the profitability and health parts. This is a solid base for a good stock. ADBE has a correct valuation and a medium growth rate. This makes ADBE very considerable for quality investing!
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
ADBE has a better Return On Assets (17.97%) than 95.34% of its industry peers.
ADBE's Return On Equity of 36.85% is amongst the best of the industry. ADBE outperforms 94.98% of its industry peers.
ADBE has a better Return On Invested Capital (29.64%) than 98.57% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ADBE is significantly above the industry average of 11.54%.
The 3 year average ROIC (25.17%) for ADBE is below the current ROIC(29.64%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.97% | ||
| ROE | 36.85% | ||
| ROIC | 29.64% |
ROA(3y)17.81%
ROA(5y)17.86%
ROE(3y)33.1%
ROE(5y)33.4%
ROIC(3y)25.17%
ROIC(5y)23.19%
1.3 Margins
ADBE's Profit Margin of 25.59% is amongst the best of the industry. ADBE outperforms 92.11% of its industry peers.
ADBE's Profit Margin has been stable in the last couple of years.
With an excellent Operating Margin value of 35.93%, ADBE belongs to the best of the industry, outperforming 97.85% of the companies in the same industry.
In the last couple of years the Operating Margin of ADBE has grown nicely.
The Gross Margin of ADBE (88.66%) is better than 94.27% 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 | 35.93% | ||
| PM (TTM) | 25.59% | ||
| GM | 88.66% |
OM growth 3Y1.15%
OM growth 5Y2.49%
PM growth 3Y-11.88%
PM growth 5Y-0.51%
GM growth 3Y0.48%
GM growth 5Y0.25%
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.
Compared to 1 year ago, ADBE has less shares outstanding
Compared to 5 years ago, ADBE has less shares outstanding
Compared to 1 year ago, ADBE has an improved debt to assets ratio.
2.2 Solvency
ADBE has an Altman-Z score of 11.94. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
ADBE has a better Altman-Z score (11.94) than 84.59% of its industry peers.
The Debt to FCF ratio of ADBE is 0.86, which is an excellent value as it means it would take ADBE, only 0.86 years of fcf income to pay off all of its debts.
ADBE has a better Debt to FCF ratio (0.86) than 75.63% of its industry peers.
A Debt/Equity ratio of 0.28 indicates that ADBE is not too dependend on debt financing.
The Debt to Equity ratio of ADBE (0.28) is worse than 62.01% 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 | 0.28 | ||
| Debt/FCF | 0.86 | ||
| Altman-Z | 11.94 |
ROIC/WACC2.51
WACC11.8%
2.3 Liquidity
A Current Ratio of 1.11 indicates that ADBE should not have too much problems paying its short term obligations.
ADBE's Current ratio of 1.11 is on the low side compared to the rest of the industry. ADBE is outperformed by 72.04% of its industry peers.
ADBE has a Quick Ratio of 1.11. This is a normal value and indicates that ADBE is financially healthy and should not expect problems in meeting its short term obligations.
With a Quick ratio value of 1.11, ADBE is not doing good in the industry: 70.25% of the companies in the same industry are doing better.
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 | 1.11 | ||
| Quick Ratio | 1.11 |
3. Growth
3.1 Past
ADBE shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 16.10%, which is quite good.
The Earnings Per Share has been growing by 18.63% 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 10.91% in the last year.
The Revenue has been growing by 16.54% on average over the past years. This is quite good.
EPS 1Y (TTM)16.1%
EPS 3Y17.01%
EPS 5Y18.63%
EPS Q2Q%13.69%
Revenue 1Y (TTM)10.91%
Revenue growth 3Y14.68%
Revenue growth 5Y16.54%
Sales Q2Q%10.59%
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 13.64% yearly.
ADBE is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.37% yearly.
EPS Next Y16.01%
EPS Next 2Y14.21%
EPS Next 3Y13.28%
EPS Next 5Y13.64%
Revenue Next Year10.65%
Revenue Next 2Y10.8%
Revenue Next 3Y10.84%
Revenue Next 5Y11.37%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 27.94 indicates a quite expensive valuation of ADBE.
Compared to the rest of the industry, the Price/Earnings ratio of ADBE indicates a somewhat cheap valuation: ADBE is cheaper than 74.55% of the companies listed in the same industry.
ADBE is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.65, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 23.83, ADBE is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ADBE indicates a somewhat cheap valuation: ADBE is cheaper than 75.27% of the companies listed in the same industry.
ADBE is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 23.56, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.94 | ||
| Fwd PE | 23.83 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ADBE is valued a bit cheaper than 77.06% of the companies in the same industry.
72.40% 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 | 33.57 | ||
| EV/EBITDA | 25.95 |
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 13.28% in the coming years.
PEG (NY)1.75
PEG (5Y)1.5
EPS Next 2Y14.21%
EPS Next 3Y13.28%
5. Dividend
5.1 Amount
ADBE does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
ADOBE INC
NASDAQ:ADBE (11/20/2024, 8:05:11 PM)
Premarket: 500.45 +0.95 (+0.19%)499.5
-0.11 (-0.02%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap219.88B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Dividend Growth(5Y)
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Div Incr Years
Div Non Decr Years
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Surprises & Revisions
EPS beat(2)
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PT rev (1m)
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EPS NQ rev (1m)
EPS NQ rev (3m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.94 | ||
| Fwd PE | 23.83 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.75
PEG (5Y)1.5
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.97% | ||
| ROE | 36.85% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 35.93% | ||
| PM (TTM) | 25.59% | ||
| GM | 88.66% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.7
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.28 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.11 | ||
| Quick Ratio | 1.11 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)16.1%
EPS 3Y17.01%
EPS 5Y
EPS Q2Q%
EPS Next Y16.01%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)10.91%
Revenue growth 3Y14.68%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y