Stock (Symbol) |
Adobe Systems (ADBE) |
Stock Price |
$109 |
Sector |
| Technology |
Data is as of |
| October 10, 2016 |
Expected to Report |
| Dec 15 |
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 |
 Adobe (ADBE) is growing profits around 40% a quarter right now, and the stock is rising as well. Years ago we used to purchase Adobe products in boxes at a computer store. Now the company has molded its business into a steady subscription model, and and profits as well as sales come in more steadily. Adobe’s subscription revenue is up from 27% in 2012 to 73% in 2015, and this has delivered more steady profit growth than the company had years ago when profits would go up-and-down. Digital video will be the #1 thing people do with their spare time, and Adobe’s software is used by the movie makers and digital marketers to make videos. Adobe’s Digital Media division is the company’s largest and includes Adobe Photoshop as well as other programs to make pictures and videos. The company’s second largest division is Digital Marketing, where Adobe’s Marketing Cloud measures $7.50 of every $10 spent online with the top 500 US retailers. ADBE is has an exceptional Estimated Long Term Growth Rate of 31% per year and sells for just 28x 2017 earnings estimates. Profits have growth the past 8 qtrs from $0.28 to 0.36, 0.44, 0.48, 0.54, 0.62, 0.66, 0.71 and most recently 0.75. This stock has rapid growth, stability with the subscription revenue, and is undervalued as well. |
One Year Chart |
 This bears repeating: Profits the past 8 qtrs: $0.28, 0.36, 0.44, 0.48, 0.54, 0.62, 0.66, 0.71 and 0.75. That’s growth quarter after quarter. Some of the best stocks of all time had profits that hit record highs each and every qtr. Last qtr the company had 39% profit growth and beat estimates of 33%. Estimates for the next 4 qtrs are 39%, 29%, 30% and 32%. Those are excellent qtrly estimates. Both Annual Profit Estimates and qtrly ones increased. The stock broke out after reporting and is at All-Time highs. |
Fair Value |
 Adobe is worth 40x earnings in my eyes. Since the company has its fiscal year end next qtr I’m looking ahead to 2017 in my Fair Value analysis. With the stock at $109 ADBE has considerable upside to my Fair Value of $154 a share. |
Bottom Line |
 Adobe Systems used to be a back-and-forth stock. Then management moved to a subscription model and that’s produced steady profit growth — in addition to stock growth. Plus, Adobe’s software is in a hot area as digital videos and images are king (and queen). This stock has a lot of positive attributes including a steady stream of revenue growth, record profits each qtr, and high forward-looking estimates. It’s also undervalued. ADBE ranks 3rd in both the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
3 of 37Aggressive Growth Portfolio 3 of 17Conservative Stock Portfolio N/A |
