ADOBE INC (ADBE)
US00724F1012 - Common Stock
We assign a fundamental rating of 7 out of 10 to ADBE. ADBE was compared to 278 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 decent growth rate and is not valued too expensively. 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.
Each year in the past 5 years ADBE has been profitable.
ADBE had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ADBE has a Return On Assets of 17.97%. This is amongst the best in the industry. ADBE outperforms 94.60% of its industry peers.
ADBE has a better Return On Equity (36.85%) than 94.60% of its industry peers.
With an excellent Return On Invested Capital value of 29.64%, ADBE belongs to the best of the industry, outperforming 98.20% 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 12.36%.
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 has a Profit Margin of 25.59%. This is amongst the best in the industry. ADBE outperforms 92.09% of its industry peers.
In the last couple of years the Profit Margin of ADBE has remained more or less at the same level.
ADBE's Operating Margin of 35.93% is amongst the best of the industry. ADBE outperforms 97.48% of its industry peers.
In the last couple of years the Operating Margin of ADBE has grown nicely.
Looking at the Gross Margin, with a value of 88.66%, ADBE belongs to the top of the industry, outperforming 93.53% 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 | 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ADBE is creating value.
Compared to 1 year ago, ADBE has less shares outstanding
ADBE has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, ADBE has an improved debt to assets ratio.
2.2 Solvency
ADBE has an Altman-Z score of 12.23. This indicates that ADBE is financially healthy and has little risk of bankruptcy at the moment.
ADBE has a better Altman-Z score (12.23) than 85.97% of its industry peers.
ADBE has a debt to FCF ratio of 0.86. This is a very positive value and a sign of high solvency as it would only need 0.86 years to pay back of all of its debts.
ADBE has a better Debt to FCF ratio (0.86) than 74.82% of its industry peers.
ADBE has a Debt/Equity ratio of 0.28. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of ADBE (0.28) is worse than 62.23% 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 | 12.23 |
ROIC/WACC2.62
WACC11.33%
2.3 Liquidity
ADBE has a Current 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.
Looking at the Current ratio, with a value of 1.11, ADBE is doing worse than 71.94% of the companies in the same industry.
A Quick Ratio of 1.11 indicates that ADBE should not have too much problems paying its short term obligations.
The Quick ratio of ADBE (1.11) is worse than 70.50% 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 | 1.11 | ||
| 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.
Measured over the past years, ADBE shows a quite strong growth in Revenue. The Revenue has been growing by 16.54% on average per year.
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
Based on estimates for the next years, ADBE will show a quite strong growth in Earnings Per Share. The EPS will grow by 13.64% on average per year.
Based on estimates for the next years, ADBE will show a quite strong growth in Revenue. The Revenue will grow by 11.37% on average per year.
EPS Next Y16.01%
EPS Next 2Y14.21%
EPS Next 3Y14.25%
EPS Next 5Y13.64%
Revenue Next Year10.65%
Revenue Next 2Y10.79%
Revenue Next 3Y10.81%
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.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
ADBE is valuated quite expensively with a Price/Earnings ratio of 28.87.
Based on the Price/Earnings ratio, ADBE is valued a bit cheaper than the industry average as 75.54% of the companies are valued more expensively.
ADBE is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 29.70, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 24.63 indicates a rather expensive valuation of ADBE.
ADBE's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. ADBE is cheaper than 76.98% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ADBE to the average of the S&P500 Index (24.16), we can say ADBE is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.87 | ||
| Fwd PE | 24.63 |
4.2 Price Multiples
76.98% of the companies in the same industry are more expensive than ADBE, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, ADBE is valued a bit cheaper than the industry average as 74.10% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 34.69 | ||
| EV/EBITDA | 26.81 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ADBE does not grow enough to justify the current Price/Earnings ratio.
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 14.25% in the coming years.
PEG (NY)1.8
PEG (5Y)1.55
EPS Next 2Y14.21%
EPS Next 3Y14.25%
5. Dividend
5.1 Amount
ADBE does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
ADOBE INC
NASDAQ:ADBE (12/2/2024, 8:21:53 PM)
After market: 516.2 0 (0%)516.2
+0.27 (+0.05%)
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 Cap227.23B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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EPS beat(8)
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EPS beat(16)
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Revenue beat(2)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
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Revenue NY rev (1m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.87 | ||
| Fwd PE | 24.63 | ||
| 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)1.8
PEG (5Y)1.55
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