ADBE  Adobe Systems Incorporated

Exchange

NASDAQ

Sector

Technology

Industry

Computer Software: Prepackaged Software

Market Cap.

73.59B

Vuru Grade

66.88/100

Current Price

$149.15
-0.38 (-0.25%)

Growth Price

$43.22
Overvalued by 71.02%

Stability Price

$17.54
Overvalued by 88.24%

Company Metrics

  • P/E 51.95
  • P/S 11.3
  • P/B 9.45
  • EPS 2.87
  • Cash ROIC 25.58%
  • Cash Ratio 1.69
  • Dividend 0 / 0%
  • Avg. Vol. 2.52M
  • Shares 493.40M
  • Market Cap. 73.59B

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 to pull plug on Flash, ending an era
Reuters - 8 hours ago
SAN FRANCISCO (Reuters) - Adobe Systems Inc's Flash, a once-ubiquitous technology used to power most of the media content found online, will be retired at the end of 2020, the software company announced Tuesday.
Adobe Plans to Stop Distributing Flash Service at End of 2020 - Bloomberg
Adobe Finally Decides to Kill Flash - Investorplace.com
Adobe: Meet Your Master, 'Sensei'
Seeking Alpha - Jul 3, 2017
The important thing is that these tools leverage ADBE's artificial intelligence capabilities of Adobe Sensei, which is one of the most important drivers of ADBE's future.
Does Adobe have Competition? Not Really
Seeking Alpha - Jun 30, 2017
You have rival photo editing companies competing against Adobe Photoshop and page layout software competing against Adobe InDesign, but there lacks a comprehensive system to rival the complete design package Adobe's built. These competitors did try ...
Why Adobe Can't Be Stopped
Seeking Alpha - Jun 29, 2017
For those that have kept long-term tabs on Adobe Systems (ADBE), you'll know the company is the beneficiary of a rather impressive turnaround effort.
Russell Investments Group, Ltd. Buys Adobe Systems Inc, SPDR Select Sector ...
GuruFocus.com - 8 hours ago
Investment company Russell Investments Group, Ltd. buys Adobe Systems Inc, SPDR Select Sector Fund - Financial, Humana Inc, Qualcomm Inc, Autodesk Inc, Brookfield Asset Management Inc, Phillips 66, Medtronic PLC, Waste Connections Inc, CME ...
Adobe Is Killing Flash
Benzinga - 5 hours ago
Adobe Systems Incorporated (NASDAQ: ADBE) bought Macromedia in 2005 and took control of a popular product known as Flash, a software used for viewing multimedia, executing rich internet applications, and streaming video and audio.
Adobe Systems Incorporated (ADBE) Stake Boosted by BlackRock Inc - Newburgh Gazette
Rehmann Capital Advisory Group Has $587000 Stake in Adobe Systems Incorporated ... - BNB Daily (blog)
Hartwell JM Limited Partnership Buys Alibaba Group Holding, Expedia Inc, Adobe ...
Nasdaq - Jul 11, 2017
Hartwell J M Limited Partnership initiated holdings in Luxottica Group SpA. The purchase prices were between $53.76 and $61.46, with an estimated average price of $58.43.
Checking the Overall Picture for Adobe Systems Incorporated (ADBE)
StockNewsJournal - Jul 19, 2017
Adobe Systems Incorporated (ADBE) is an interesting player in the Technology space, with a focus on Application Software. The stock has been active on the tape, currently trading at $147.89, up from yesterday's close by 1.02%.
Geschke Sells 25000 Shares of Adobe Systems Incorporated (NASDAQ:ADBE) Stock - Newburgh Gazette
Traders Secrets on Cadence Design Systems, Inc. (CDNS), Adobe Systems ...
StockNewsJournal - Jul 21, 2017
Adobe Systems Incorporated (NASDAQ:ADBE), maintained return on investment for the last twelve months at 14.33, higher than what Reuters data shows regarding industry's average.
Russell Investments Group, Ltd. Bought A Lot More Adobe Systems Incorporated ...
Highlight Press - 6 hours ago
Russell Investments Group, Ltd. says it bought 69,075 shares in the previous quarter increasing its stake in Adobe Systems Incorporated (ADBE) by 58.7%. Its position was worth $26,403,000 an increase of $11,100,000 as of the end of the quarter.
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.

$149.15 Current Price

$43.22 Growth Price (DCF)

Overvalued by 71.02%


Growth Rate Assumed by Market: 39.50%


Future Free Cash Flow Growth Rate: 2.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$17.54 Stability Price (EPV)

Overvalued by 88.24%


Discount Rate: 15.0%

$1.13 NCA Price

Overvalued by 99.24%

$65.67 Book Price

Overvalued by 55.97%


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.