Now trading at a price of $620.52, Adobe has moved 1.7% so far today.
Adobe returned gains of 80.4% last year, with its stock price reaching a high of $628.6 and a low of $318.6. Over the same period, the stock outperformed the S&P 500 index by 65.0%. More recently, the company's 50-day average price was $568.16. Adobe Inc., together with its subsidiaries, operates as a diversified software company worldwide. Based in San Jose, CA, the large-cap Technology company has 29,239 full time employees. Adobe has not offered a dividend during the last year.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $9,030 | $11,171 | $12,868 | $15,785 | $17,606 | $18,886 |
| Revenue Growth | n/a | 23.71% | 15.19% | 22.67% | 11.54% | 7.27% |
| Operating Margins | 31% | 28% | 33% | 37% | 35% | 34% |
| Net Margins | 28% | 26% | 41% | 31% | 27% | 27% |
| Net Income (MM) | $2,591 | $2,951 | $5,260 | $4,822 | $4,756 | $5,121 |
| Net Interest Expense (MM) | $89 | $157 | $116 | $113 | $112 | $113 |
| Depreciation & Amort. (MM) | $346 | $757 | $757 | $788 | $856 | $865 |
| Earnings Per Share | $5.2 | $6.0 | $10.83 | $10.02 | $10.1 | $11.11 |
| EPS Growth | n/a | 15.38% | 80.5% | -7.48% | 0.8% | 10.0% |
| Diluted Shares (MM) | 498 | 492 | 486 | 481 | 471 | 430 |
| Free Cash Flow (MM) | $3,762 | $4,027 | $5,308 | $6,882 | $7,396 | $7,626 |
| Capital Expenditures (MM) | $267 | $395 | $419 | $348 | $442 | $404 |
| Current Ratio | 1.13 | 0.79 | 1.48 | 1.25 | 1.11 | 1.25 |
| Long Term Debt (MM) | $4,125 | $989 | $4,117 | $4,123 | $3,629 | $3,633 |
| Net Debt / EBITDA | 0.79 | 0.37 | -0.07 | 0.04 | -0.02 | -0.4 |
Adobe benefits from growing revenues and increasing reinvestment in the business, low leverage, and decent operating margins with a stable trend. The company's financial statements show a strong EPS growth trend and irregular cash flows.
Adobe Has Elevated P/B and P/E Ratios:
Adobe has a trailing twelve month P/E ratio of 51.2, compared to an average of 35.0 for the Technology sector. Based on its EPS guidance of $17.9, the company has a forward P/E ratio of 31.7. Adobe's PEG ratio is 5.05 on the basis of the 10.1% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. Furthermore, Adobe is likely overvalued compared to the book value of its equity, since its P/B ratio of 17.94 is higher than the sector average of 7.92. The company's shares are currently trading 547.2% above their Graham number. Overall, Adobe's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.
Adobe Has an Average Rating of Buy:
The 28 analysts following Adobe have set target prices ranging from $428.0 to $700.0 per share, for an average of $621.93 with a buy rating. As of April 2023, the company is trading -8.6% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Adobe has a very low short interest because 1.2% of the company's shares are sold short. Institutions own 86.1% of the company's shares, and the insider ownership rate stands at 0.29%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $24,611,803,375.
