ADBE gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 277 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.
In the past year ADBE had a positive cash flow from operations.
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

With an excellent Return On Assets value of 24.17%, ADBE belongs to the best of the industry, outperforming 97.47% of the companies in the same industry.
Looking at the Return On Equity, with a value of 61.34%, ADBE belongs to the top of the industry, outperforming 97.47% of the companies in the same industry.
With an excellent Return On Invested Capital value of 36.51%, ADBE belongs to the best of the industry, outperforming 97.83% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ADBE is significantly above the industry average of 10.78%.
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 better Profit Margin (30.00%) than 89.89% of its industry peers.
In the last couple of years the Profit Margin of ADBE has declined.
ADBE's Operating Margin of 36.63% is amongst the best of the industry. ADBE outperforms 94.58% of its industry peers.
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 95.67% of the companies in the same industry.
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.
Compared to 1 year ago, ADBE has less shares outstanding
The number of shares outstanding for ADBE has been reduced compared to 5 years ago.
Compared to 1 year ago, ADBE has a worse debt to assets ratio.

2.2 Solvency

ADBE has an Altman-Z score of 8.14. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ADBE (8.14) is better than 85.56% 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.
The Debt to FCF ratio of ADBE (0.63) is better than 77.98% 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.
With a Debt to Equity ratio value of 0.53, ADBE is not doing good in the industry: 66.79% of the companies in the same industry are doing better.
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	8.14

ROIC/WACC3.31

WACC11.04%

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 75.09% of its industry peers.
A Quick Ratio of 1.00 indicates that ADBE may have some problems paying its short term obligations.
With a Quick ratio value of 1.00, ADBE is not doing good in the industry: 74.01% 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
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

ADBE shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.74%, which is quite good.
The Earnings Per Share has been growing by 15.87% on average over the past years. This is quite good.
The Revenue has grown by 10.53% in the past year. This is quite good.
The Revenue has been growing by 13.06% on average over the past years. This is quite good.

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

The Earnings Per Share is expected to grow by 9.91% on average over the next years. This is quite good.
Based on estimates for the next years, ADBE will show a quite strong growth in Revenue. The Revenue will grow by 8.02% on average per year.

EPS Next Y14.38%

EPS Next 2Y13.69%

EPS Next 3Y12.98%

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.
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 14.31, which indicates a correct valuation of ADBE.
ADBE's Price/Earnings ratio is rather cheap when compared to the industry. ADBE is cheaper than 82.67% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.32, ADBE is valued a bit cheaper.
With a Price/Forward Earnings ratio of 12.51, ADBE is valued correctly.
Based on the Price/Forward Earnings ratio, ADBE is valued cheaply inside the industry as 84.48% of the companies are valued more expensively.
ADBE is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 24.32, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	14.31
Fwd PE	12.51

4.2 Price Multiples

ADBE's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ADBE is cheaper than 84.12% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ADBE is valued cheaper than 87.73% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	12.74
EV/EBITDA	13.01

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.
ADBE's earnings are expected to grow with 12.98% in the coming years. This may justify a more expensive valuation.