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Adobe Systems (ADBE) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Adobe Systems (ADBE) closed at $298.86, marking a -1.57% move from the previous day. This change lagged the S&P 500's daily loss of 1.09%. Meanwhile, the Dow lost 1.23%, and the Nasdaq, a tech-heavy index, lost 1.19%.

Coming into today, shares of the software maker had gained 0.75% in the past month. In that same time, the Computer and Technology sector gained 4.47%, while the S&P 500 gained 2.62%.

ADBE will be looking to display strength as it nears its next earnings release. On that day, ADBE is projected to report earnings of $1.97 per share, which would represent year-over-year growth of 13.87%. Our most recent consensus estimate is calling for quarterly revenue of $2.81 billion, up 22.65% from the year-ago period.

ADBE's full-year Zacks Consensus Estimates are calling for earnings of $7.81 per share and revenue of $11.17 billion. These results would represent year-over-year changes of +15.53% and +23.66%, respectively.

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Investors might also notice recent changes to analyst estimates for ADBE. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 remained stagnant. ADBE currently has a Zacks Rank of #3 (Hold).

In terms of valuation, ADBE is currently trading at a Forward P/E ratio of 38.87. For comparison, its industry has an average Forward P/E of 30.99, which means ADBE is trading at a premium to the group.

It is also worth noting that ADBE currently has a PEG ratio of 2.22. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ADBE's industry had an average PEG ratio of 2.1 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 61, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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