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

Adobe Systems (ADBE) closed at $370 in the latest trading session, marking a +1.07% move from the prior day. This change outpaced the S&P 500's 0.73% gain on the day. At the same time, the Dow added 0.6%, and the tech-heavy Nasdaq gained 1.13%.

Heading into today, shares of the software maker had gained 7.53% over the past month, outpacing the Computer and Technology sector's gain of 5.28% and the S&P 500's gain of 2.95% in that time.

Investors will be hoping for strength from ADBE as it approaches its next earnings release. On that day, ADBE is projected to report earnings of $2.23 per share, which would represent year-over-year growth of 30.41%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.04 billion, up 17.04% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.80 per share and revenue of $13.15 billion, which would represent changes of +24.52% and +17.68%, respectively, from the prior year.

Any recent changes to analyst estimates for ADBE should also be noted by investors. 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.

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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.07% higher. ADBE is currently a Zacks Rank #2 (Buy).

Digging into valuation, ADBE currently has a Forward P/E ratio of 37.36. This represents a premium compared to its industry's average Forward P/E of 33.6.

We can also see that ADBE currently has a PEG ratio of 2.3. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ADBE's industry had an average PEG ratio of 2.31 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 70, which puts it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research