Now trading at a price of $333.61, Adobe has moved 0.08% so far today. In contrast, the S&P 500 index moved 1.09%.
Adobe shares moved -24.58% over the last 52 weeks, with a high of $473.49 and a low of $274.73. During this time, the stock lagged the S&P 500 index by -12.8%. As of January 2022, the company's 50-day average price is $351.77. Adobe Inc. is an American multinational computer software company. The large-cap Technology company is based in San Jose, CA.
Operating Margins Consistently Higher Than the 21.81% Industry Average:
| 2019-11-29 | 2020-11-27 | 2021-12-03 | 2022-12-02 | |
|---|---|---|---|---|
| Revenue (MM) | $11,171 | $12,868 | $15,785 | $17,606 |
| Revenue Growth | n/a | 15.19% | 22.67% | 11.54% |
| Operating Margins | 29.25% | 32.93% | 36.76% | 34.64% |
| Operating Margins Growth | n/a | 12.58% | 11.63% | -5.77% |
| Net Margins | 26.42% | 40.88% | 30.55% | 27.01% |
| Net Margins Growth | n/a | 54.73% | -25.27% | -11.59% |
| Earnings Per Share | $6.12 | $10.98 | $10.15 | $10.29 |
| EPS Growth | n/a | 79.41% | -7.56% | 1.38% |
| Diluted Shares (MM) | 482 | 479 | 475 | 462 |
| Free Cash Flow (MM) | $4,028 | $5,308 | $6,882 | $7,396 |
| FCF Growth | n/a | 31.79% | 29.65% | 7.47% |
| Capital Expenditures (MM) | $394 | $419 | $348 | $442 |
| Net Debt / EBITDA | 0.38 | -0.06 | 0.06 | -0.0 |
Adobe Is Currently Fairly Valued:
Compared to the Technology sector's average of 27.16, Adobe has a trailing twelve month P/E ratio of 32.14 and, according to its EPS guidance of 17.5, an expected P/E ratio of 19.06. Adobe's PEG ratio is 1.02 based on its 31.4% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Adobe's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 2.46, which suggests that the company's shares are actually overvalued.
Adobe's P/B ratio is 10.99 compared to its sector average of 6.23. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 335.64% above their fair value as expressed by Benjamin Graham's formula:
√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 8.57 * 30.41) = $76.58
Adobe's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.
31 analysts are following Adobe and have set target prices ranging from $321.0 to $475.0 per share. On average, they have given the company a rating of buy. At the current price of $333.61, ADBE is trading -13.86% away from its average analyst target price of $387.29 per share, implying an analyst consensus of some upside potential for the stock.
