Stock (Symbol) |
Adobe Systems (ADBE) |
Stock Price |
$94 |
Sector |
| Technology |
Data is as of |
| January 4, 2016 |
Expected to Report |
| Jan 27 – Feb 1 |
Company Description |
 Adobe Systems Incorporated (Adobe) is a software company. The Company offers products and services for professionals, marketers, application developers, enterprises and consumers for creating, managing, delivering, optimizing and engaging with content. Adobe markets and licenses its products and services through app stores and its Website www.adobe.com. The Company’s operates in three segments: Digital Marketing, Digital Media, and Print and Publishing. In Digital Media, the Company is engaged in providing tools, services and solutions that enable to create, publish and promote their content. In Digital Marketing, the Company is engaged in providing solutions and services for creating, managing, executing, measuring and optimizing digital advertising and marketing campaigns. Adobe’s Print and Publishing segment addresses various market opportunities, including eLearning solutions, technical document publishing, Web application development and high-end printing. Source: Thomson Financial |
Sharek’s Take |
 The future is software, and Adobe (ADBE) is in the center of it. The world is going digital, and today only 8% of ADBE sales come from print & publishing. 63% of sales now come from Digital Media, as creative artists use Adobe Photoshop and other programs to make pictures and videos. YouTube’s CEO predicts digital video will be the #1 thing people do with their spare time, and Adobe’s software is what they’re using. Hollywood even uses Adobe to make movies. 33% of ADBE sales come from Digital Marketing, where Adobe’s Marketing Cloud measures $7.50 of every $10 spent online with the top 500 US retailers. What’s special is Adobe has moved into a subscription model, which provides a steady revenue stream. Recurring revenue us up from 27% in 2012 to 73% in 2015. Now management can use analytics to see sales forecasts, and the company has a target of 30% profit growth/20% sales growth from 2015-2018. The stock market is in a severe correction (crash?) with the average stock down 25% from its highs, yet ADBE is 8% off its highs, selling for $89 now or 32x earnings. I will purchase ADBE in the Growth Portfolio and Aggressive Growth Portfolio today. Business today is done with Adobe. |
One Year Chart |
 Wow, one of the only stocks to be up in the last year. And soundly higher; slow and steady. Profit growth has been excellent the last 4 qtrs, and in each qtr profits have grown not only above last year, but the previous qtr as well ($0.44, 0.48, $0.54, $0.62). Solid Est LTG of 33% per year, reasonable P/E of 34. Estimated profit growth for the next 4 qtrs are: 39%, 35%, 33% and 27%. This stock looks great. |
Fair Value |
 Adobe is a different company than it used to be. Years ago people used to buy Adobe products (or get a pirated copy online) and then be set for years. Today you have to pay your subscription, like you do Netflix. This recurring revenue makes ADBE a more dependable stock. My Fair Value is 40x earnings, which is $111 this year and $148 next year, but I intend to buy-and-hold (note these tables and charts are as of 1/4 when the stock was $94). |
Bottom Line |
 Adobe is at the center of the new digital age, as companies depend on its software to communicate with customers. Digital video is king, with digital ads being the queen, and Adobe is at the center of it.
This could be a 30% grower, and the stock is behaving like that is the case. The stock will rank 6th in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
6 of 37Aggressive Growth Portfolio 6 of 17Conservative Stock Portfolio N/A |
