ADBE  Adobe Systems Incorporated

Exchange

NASDAQ

Sector

Technology

Industry

Computer Software: Prepackaged Software

Market Cap.

71.93B

Vuru Grade

66.88/100

Current Price

$145.77
+1.2034 (+0.8324%)

Growth Price

$43.22
Overvalued by 70.35%

Stability Price

$17.54
Overvalued by 87.97%

Company Metrics

  • P/E 45.8262
  • P/S 10.3333
  • P/B 8.7306
  • EPS 3.181
  • Cash ROIC 25.58%
  • Cash Ratio 1.69
  • Dividend 0 / 0%
  • Avg. Vol. 1.98M
  • Shares 493.44M
  • Market Cap. 71.93B

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) Stock Dips Are Opportunities — Go Long!
Investorplace.com - Sep 21, 2017
Adobe Systems Incorporated (NASDAQ:ADBE) reported earnings yesterday and Wall Street sold it in droves. Even though the report was decent, the stock fell 4%.
Checking the Overall Picture for Adobe Systems Incorporated (ADBE) - StockNewsJournal
Adobe Systems Incorporated (ADBE) Moves Lower on Volume Spike for September 21 - Equities.com
Adobe: Digitally Transformed In The Cloud
Seeking Alpha - Sep 22, 2017
Adobe (ADBE) continued to deliver operating results that beat expectations this week. Quarterly revenue of $1.84 billion grew 26% beating consensus expectations by $20 million.
Adobe Moves Closer To Microsoft
Seeking Alpha - Sep 21, 2017
During the quarter, revenues from Adobe's digital media business, which includes Creative Cloud, increased 28.3% percent to $1.27 billion, ahead of the Street's estimates of $1.25 billion.
Adobe: Beat-And-Raise Met With Little Enthusiasm
Seeking Alpha - Sep 20, 2017
Adobe reported solid top and bottom line beats in Q3 and raised its full-year guidance. Revenues grew 26% y/y and the company's transition to a subscription model remains on track.
Adobe Systems Inc. Profit Climbs 45% In Q3 - Nasdaq
Adobe Systems Inc. Earnings Beat… But Look Closer at ADBE - Investorplace.com
Buy or Sell? What Analysts Recommends: Adobe Systems Incorporated (ADBE), The ...
StockNewsJournal - 5 hours ago
Adobe Systems Incorporated (ADBE) have shown a high EPS growth of 7.00% in the last 5 years and has earnings rose of 86.70% yoy.
Target Price for Adobe Systems Incorporated (ADBE) now above 20 DMA also Wynn ... - NY Stock News
Adobe Systems Incorporated (ADBE) Dips 2.65% for September 25 - Equities.com
3 Stocks to Watch on Wednesday: Adobe Systems Incorporated (ADBE), Bed Bath ...
Investorplace.com - Sep 20, 2017
Major U.S. indices posted slight gains Tuesday, with telecom stocks surging 2.3%, while oil fell 0.9%. The Dow Jones Industrial Average surged 0.2%, the S&P 500 gained 0.1% and the Nasdaq Composite edged 0.1% higher.
Bed Bath & Beyond, FedEx, Adobe Systems and more - AFTER HOURS - Proactive Investors UK
Adobe - The Reason The Shares Are Correcting
Seeking Alpha - Sep 20, 2017
Adobe Systems (NASDAQ:ADBE) - RATING LOWERED FROM STRONG BUY TO BUY: ADBE reported August FQ3 results of $1.84 billion and $1.10, above expectations for $1.81 billion and $1.01 that were based on $1.82 billion and $1.00 guidance.
Adobe First Look: Another Beat, What's New?
Seeking Alpha - Sep 19, 2017
Adobe (NASDAQ:ADBE) does it again. The San Jose-based company delivered another all-around beat coupled with better-than-expected guidance this Tuesday, and reinforced my belief that the stock is a potential GARP (growth at reasonable price) play ...
Adobe: A GARP Play Worth A Look
Seeking Alpha - Sep 12, 2017
Can Adobe Systems (NASDAQ:ADBE) deliver yet another beat this month? It has become a recurring theme. Since fiscal 1Q14, the San Jose-based company has exceeded the Street's quarterly earnings projections 13 times in a row.
Adobe Deep Dive: In Breakout Territory
Seeking Alpha - Sep 5, 2017
The company has fully transitioned to the SaaS model, and subscription revenues are growing at an unprecedented scale. Revenue growth in the first half of 2017 actually accelerated over growth in 2016.
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.

$145.77 Current Price

$43.22 Growth Price (DCF)

Overvalued by 70.35%


Growth Rate Assumed by Market: 38.90%


Future Free Cash Flow Growth Rate: 2.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$17.54 Stability Price (EPV)

Overvalued by 87.97%


Discount Rate: 15.0%

$1.13 NCA Price

Overvalued by 99.22%

$65.67 Book Price

Overvalued by 54.95%


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.