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Adobe Systems (ADBE) Outpaces Stock Market Gains: What You Should Know

Adobe Systems (ADBE) closed at $349.74 in the latest trading session, marking a +1.26% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.39%. Elsewhere, the Dow gained 0.17%, while the tech-heavy Nasdaq added 0.34%.

Heading into today, shares of the software maker had gained 5.42% over the past month, lagging the Computer and Technology sector's gain of 6.58% and outpacing the S&P 500's gain of 4.73% in that time.

ADBE will be looking to display strength as it nears its next earnings release. In that report, analysts expect ADBE to post earnings of $2.23 per share. This would mark year-over-year growth of 30.41%. Meanwhile, our latest consensus estimate is calling for revenue of $3.04 billion, up 17.04% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.80 per share and revenue of $13.15 billion. These totals would mark changes of +24.52% and +17.68%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for ADBE. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.02% higher. ADBE is currently a Zacks Rank #2 (Buy).

Investors should also note ADBE's current valuation metrics, including its Forward P/E ratio of 35.25. This valuation marks a premium compared to its industry's average Forward P/E of 33.23.

Also, we should mention that ADBE has a PEG ratio of 2.17. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Computer - Software stocks are, on average, holding a PEG ratio of 2.24 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 92, putting it in the top 37% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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