ADBE  Adobe Systems Incorporated

Exchange

NASDAQ

Sector

Technology

Industry

Computer Software: Prepackaged Software

Market Cap.

63.16B

Vuru Grade

66.88/100

Current Price

$127.70
+0.83 (+0.65%)

Growth Price

$43.12
Overvalued by 66.23%

Stability Price

$17.50
Overvalued by 86.29%

Company Metrics

  • P/E 48.76
  • P/S 10.2
  • P/B 8.27
  • EPS 2.62
  • Cash ROIC 25.58%
  • Cash Ratio 1.69
  • Dividend 0 / 0%
  • Avg. Vol. 2.36M
  • Shares 494.60M
  • Market Cap. 63.16B

Company Description

Adobe Systems Incorporated operates as a diversified software company in the Americas, Europe, the Middle East, Africa, and Asia. It offers a line of creative, business, Web, and mobile software and services used by creative professionals, knowledge workers, developers, marketers, enterprises, and consumers. The company's Creative Solutions segment focuses on solutions for professional publishing,... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Adobe Systems Incorporated (ADBE) Announces Q1 Fiscal Year 2017 Financial Results
Smarter Analyst - Mar 16, 2017
Adobe Systems, Inc. engages in the provision of digital marketing and digital media solutions. It operates through the following segments: Digital Media, Digital Marketing, and Print and Publishing.
Adobe Is Now A Clear Buy - Seeking Alpha
Adobe Systems Incorporated (ADBE) Stock Soars on Earnings Beat - Investorplace.com
Analyst Activity – Canaccord Genuity Reiterates Buy on Adobe Systems ...
Market Exclusive - Mar 24, 2017
The current consensus rating on Adobe Systems Incorporated (NASDAQ:ADBE) is Buy (Score: 2.76) with a consensus target price of $128.67 per share, a potential 0.76% upside.
How Does Adobe Systems Incorporated (ADBE) Stack Up Right Now? - StockNewsJournal
Analysts Near-Term outlook: Adobe Systems Incorporated (ADBE), PACCAR Inc (PCAR) - The USA Commerce
Adobe Systems Incorporated (ADBE) Stock Is an Easy Short
Investorplace.com - Mar 21, 2017
Shares of Adobe Systems Incorporated (NASDAQ:ADBE) rallied sharply last week after the company reported its latest financial results.
Adobe Systems Incorporated (NASDAQ:ADBE) Is Destined to Cross $140 - Library For Smart Investors
Adobe Systems Incorporated Risk Points versus Technology - CML News
Why Adobe Systems Incorporated (ADBE) Stock Will Keep on Truckin'
Investorplace.com - Mar 15, 2017
It was only a few years ago that investors were wondering whether Adobe Systems Incorporated (NASDAQ:ADBE) was in a long-term decline.
Sell-Side Analyst's Predictions: HCA Holdings, Inc. (HCA), Adobe Systems ... - The USA Commerce
Adobe Rises To A 52-Week High
Seeking Alpha - Mar 21, 2017
Adobe's first quarter revenues grew an impressive 22% over the year to $1.68 billion, ahead of the market's projections of $1.64 billion.
2 Stocks to Watch For Adobe Systems Incorporated (NASDAQ:ADBE), Waste ... - Daily News Journal
Adobe Systems Incorporated (NASDAQ:ADBE) Heffx Trading Outlook
Live Trading News - Mar 17, 2017
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top.
Insider Trading Activity Adobe Systems Incorporated (NASDAQ:ADBE) – EVP Sold ...
Market Exclusive - Mar 24, 2017
On 10/4/2012 John E Warnock, Chairman, sold 40,000 with an average share price of $32.59 per share and the total transaction amounting to $1,303,600.00.
3 Stocks to Watch on Friday: Netflix, Inc. (NFLX), Valeant Pharmaceuticals ...
Investorplace.com - Mar 17, 2017
... colliding with the first round of the NCAA men's basketball tournament, a few companies are still worth watching: They include Netflix, Inc. (NASDAQ:NFLX), Adobe Systems Incorporated (NASDAQ:ADBE) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX).
The Technical Case for and Against Adobe Systems Incorporated (ADBE)
The USA Commerce - Mar 17, 2017
We have gathered the technical data on Adobe Systems Incorporated (ADBE), and see some interesting trends in the stock's behavior of late.
Risk Malaise Alert in Option Market: Adobe Systems Incorporated Implied Price ...
CML News - Mar 20, 2017
Before we dive into any analysis we simply note that Adobe Systems Incorporated (NASDAQ:ADBE) risk is actually priced pretty low by the option market as of right now.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for ADBE to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate ADBE's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$127.70 Current Price

$43.12 Growth Price (DCF)

Overvalued by 66.23%


Growth Rate Assumed by Market: 35.45%


Future Free Cash Flow Growth Rate: 2.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$17.50 Stability Price (EPV)

Overvalued by 86.29%


Discount Rate: 15.0%

$1.13 NCA Price

Overvalued by 99.12%

$64.80 Book Price

Overvalued by 49.25%


Excellent Cash Return on Invested Capital over the past 5 years

ADBE has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

ADBE has created $25.58 of cash for every $100 invested.
Figures in USD. Fiscal year ends in November
20122013201420152016
Free Cash Flow 1.23B 963.33M 1.14B 1.28B 2.00B
divided by
Invested Capital 5.16B 5.68B 4.55B 5.52B 5.13B
Cash ROIC 23.79% 16.96% 25.03% 23.25% 38.88%

Poor Return on Equity over the past 5 years

ADBE has shown an inability to deliver strong results for shareholders. This could be due to poor management, ADBE operating in a highly competitive industry, or having a weak business in general.

ADBE has only generated $9.10 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in November
20122013201420152016
Net Income 832.78M 289.99M 268.40M 629.55M 1.17B
divided by
Stockholders' Equity 6.67B 6.72B 6.78B 7.00B 7.42B
Return on Equity 12.49% 4.31% 3.96% 8.99% 15.74%

Excellent Business Performance over the past 10 years

ADBE has been able to maintain profitability in good times and bad. This could mean ADBE has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

ADBE has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Free Cash Flow 1.31B 1.17B 998.18M 943.35M 1.33B 1.23B 963.33M 1.14B 1.28B 2.00B

Strong Balance Sheet

ADBE is financially strong with Current Assets covering Total Liabilities. It's in a fairly liquid position and dependent on the amount and saleability of any inventory; it may have the financial security to survive an economic downturn.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Cash 1.99B 2.02B 1.90B 2.47B 2.91B 3.54B 3.17B 3.74B 3.99B 4.76B
Current Assets 2.57B 2.74B 2.47B 3.22B 3.77B 4.33B 4.05B 4.60B 4.82B 5.84B
Total Assets 5.71B 5.82B 7.28B 8.14B 8.99B 9.97B 10.38B 10.79B 11.73B 12.71B
Current Liabilities 852.41M 762.60M 844.55M 1.07B 1.25B 1.27B 1.53B 2.49B 2.21B 2.81B
Total Liabilities 1.06B 1.41B 2.39B 2.95B 3.21B 3.31B 3.66B 4.01B 4.72B 5.28B
Stockholder' Equity 4.65B 4.41B 4.89B 5.19B 5.78B 6.67B 6.72B 6.78B 7.00B 7.42B
Current Ratio 3.02 3.59 2.93 3.01 3.02 3.41 2.65 1.85 2.18 2.08
TL-to-TA 0.19 0.24 0.33 0.36 0.36 0.33 0.35 0.37 0.40 0.42

Consistent Reinvestment of Profits over the past 10 years

ADBE has consistently retained profits. This may put ADBE in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, ADBE can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Retained Earnings 4.04B 4.91B 5.30B 5.98B 6.53B 7.00B 6.93B 6.92B 7.25B 8.11B
Retained Earnings Growth - 21.57% 7.87% 12.85% 9.16% 7.26% -1.06% -0.07% 4.75% 11.87%

Inconsistent Net Profit Margins over the past 10 years

ADBE potentially has a competitive advantage, however inconsistent profit margins are a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$16.62 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Net Income 723.81M 871.81M 386.51M 774.68M 832.85M 832.78M 289.99M 268.40M 629.55M 1.17B
divided by
Revenue 3.16B 3.58B 2.95B 3.80B 4.22B 4.40B 4.06B 4.15B 4.80B 5.85B
Net Profit Margin 22.92% 24.35% 13.12% 20.39% 19.75% 18.91% 7.15% 6.47% 13.13% 19.96%

Strong Pricing Power over the past 10 years

ADBE has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$87.76 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Gross Profit 2.80B 3.22B 2.65B 3.40B 3.78B 3.92B 3.47B 3.52B 4.05B 5.03B
divided by
Revenue 3.16B 3.58B 2.95B 3.80B 4.22B 4.40B 4.06B 4.15B 4.80B 5.85B
Gross Margin 88.77% 89.87% 89.93% 89.38% 89.61% 89.01% 85.54% 85.00% 84.48% 86.00%

Medium Capital Intensity over the past 10 years

ADBE has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

30.87% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Capital Expenditure 132.08M 111.79M 119.59M 169.64M 210.29M 271.08M 188.36M 148.33M 184.94M 203.81M
divided by
Net Income 723.81M 871.81M 386.51M 774.68M 832.85M 832.78M 289.99M 268.40M 629.55M 1.17B
Capital Expenditure Ratio 18.25% 12.82% 30.94% 21.90% 25.25% 32.55% 64.95% 55.27% 29.38% 17.44%

No Dividend History over the past 10 years

ADBE has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 598.78M 548.55M 530.61M 525.82M 503.92M 502.72M 513.48M 508.48M 507.16M 504.30M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 42.93 21.05 37.18 30.57 28.27 36.90 59.55 73.10 95.28 102.95
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

ADBE has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in November
2007200820092010201120122013201420152016
Shares Outstanding 598.78M 548.55M 530.61M 525.82M 503.92M 502.72M 513.48M 508.48M 507.16M 504.30M
Stock Bought Back - 9.16% 3.38% 0.91% 4.35% 0.24% -2.09% 0.98% 0.26% 0.57%
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Discussion
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2
Posted by jeff.shaw32  (on March 18, 2012)
Damnit! Wish I’d bought at $20. Such a high quality company. Extremely low capital costs, huge margins and an economic moat to boot. Hard to find this in a tech company. It’s even still undervalued. Maybe I’ll buy now...
1
Posted by pbanik  (on November 23, 2012)
@ jeff.shaw32 and Alexleroi, you may get your chance if the looming fiscal cliff does take place. In February 2009, the stock was trading at $16.70, or roughly slightly above 50% what is trading for now. Stocks tend to fluctuate in price. Over the course of time, good or even great stocks can be bought at bargain prices. The problem is you might have to wait years. The last time the price was that low for ADBE stock was July2003, when it was trading at $16.36. In terms of price/book and price/sales valuation metrics, the stock is too expensive for me right now. I would rather wait for a pullback and buy later. INTC is looking more attractive right now.
1
Posted by buffettdisciple  (on March 19, 2012)
I bought at $22 and haven’t looked back. Apple dropping flash certainly scared people but they forget how many other products ADBE offers. They’re extremely proficient at building high quality products that can’t be rivaled. Very profitable (and consistent too!). Think I’ll probably exit at $35 and hope for a price drop in teh future.
1
Posted by Alexleroi  (on November 22, 2012)
It's somewhat expensive now. I hope it drop.