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Adobe Systems (ADBE) Gains But Lags Market: What You Should Know

Adobe Systems (ADBE) closed the most recent trading day at $525.08, moving +0.35% from the previous trading session. The stock lagged the S&P 500's daily gain of 0.36%.

Prior to today's trading, shares of the software maker had gained 13.22% over the past month. This has outpaced the Computer and Technology sector's gain of 9.06% and the S&P 500's gain of 5.21% in that time.

ADBE will be looking to display strength as it nears its next earnings release. On that day, ADBE is projected to report earnings of $2.81 per share, which would represent year-over-year growth of 14.69%. Meanwhile, our latest consensus estimate is calling for revenue of $3.73 billion, up 19.31% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.88 per share and revenue of $15.43 billion, which would represent changes of +17.62% and +19.93%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ADBE. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 5.9% higher within the past month. ADBE currently has a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that ADBE has a Forward P/E ratio of 42.97 right now. For comparison, its industry has an average Forward P/E of 39.26, which means ADBE is trading at a premium to the group.

It is also worth noting that ADBE currently has a PEG ratio of 2.35. 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 2.7 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 87, putting it in the top 35% 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.

To follow ADBE in the coming trading sessions, be sure to utilize Zacks.com.


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