What Can We Learn From Adobe Inc.(ADBE)’s Valuation Ratios?

Adobe Inc. (NASDAQ:ADBE) trading with an addition of $15.69 to $586.00 on Thursday, an upside of 2.75 percent. An average of 2,405,823 shares of common stock have been traded in the last five days. There was a gain of $8.75 in the past week. The last 20 days have seen an average of 2,827,041 shares traded, while the 50-day average volume stands at 1,918,114.

ADBE stock has decreased by -13.77% in the last month. The company shares reached their 1-month lowest point of $552.14 on 10/04/21. With the stock rallying to its 52-week high on 09/03/21, shares of the company touched a low of $420.78 and a high of $673.88 in 52 weeks. In spite of this, the price is down -13.04% from the 52-week high.


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Insider Transactions

13 days have passed since Adobe Inc. (ADBE) last reported insider trading activity. WARNOCK JOHN E, who is Director, most recently acquired $3,000 shares at $628.03 per share on Sep 24. In this transaction, the insider spent $1,884,097. Chairman, President and CEO, NARAYEN SHANTANU, disposed of 40,000 shares at a price of $620.26 on Sep 24. The insider now owns more than $24,810,482 worth of shares. Prior to that, EVP, Chief People Officer Chen Gloria went on to Sale 42 shares at $628.00 each on Sep 24. An amount of $26,376 was transacted.

Valuation Metrics

Adobe Inc. (ADBE) has a trailing price-to-earnings (P/E) ratio of 47.06, which compares with the 29.20 for the broader industry and 37.33 for the sector. This means investors are optimistic about the stock’s future prospects. In the last five years, Adobe Inc.’s PE ratio has ranged between 69.72 and 36.66. The stock’s beta is 1.03. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 17.92, the price-to-book (PB) ratio at 18.87, and the price-to-cash flow ratio at 41.03.

The quick ratio of Adobe Inc. for the three months ended May 30 was 1.40, and the current ratio was 1.40. Further, the company has a long term debt to equity ratio of 0.29 and a total debt to equity ratio of 0.00 for the quarter ending May 30. On the profitability front, the trailing 12-month gross margin is 88.20% against a 5-year average of 86.1%. Adobe Inc.’s EBITDA margin for the year ending May 30 is 38.80%, while its operating margin for the same period stands at 36.50%. Its gross profit as reported stood at $11.15 billion compared to revenue of $12.87 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Adobe Inc.’s return on assets was 23.10%, compared to 15.2% over the last five years. In the past year, the return on investment has been 30.60%, and the 5-year average is 20.8%. Meanwhile, the return on equity (ROE) for the past 12 months has been 42.40% and the 5-year average holds at 28.1%. For the broader industry, ROE averaged 3.34 over the past year.

Earnings Surprise

For the three-month period that ended May 30, Adobe Inc. had $1.54 billion in cash. The analyst consensus anticipated Adobe Inc.’s latest quarter earnings to come in at $2.81 per share, but it turned out to be $3.03, a 7.80% surprise. For the quarter, EBITDA amounted to $1.63 billion. Shareholders own equity worth $475.8 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Adobe Inc. (ADBE) price momentum. RSI 9-day as of the close on 06 October was 39.63%, suggesting the stock is Neutral, with historical volatility in this time frame at 34.17%.

As of today, ADBE’s price is $571.49 +1.52% or $8.75 from its 5-day moving average. ADBE is currently trading -11.67% lower than its 20-day SMA and +21.07% higher than its 100-day SMA. However, the stock’s current price level is -5.87% below the SMA50 and +17.27% above the SMA200.

The stochastic %K and %D were 20.20% and 13.59%, respectively, and the average true range (ATR) was 14.89. With the 14-day stochastic at 31.76% and the average true range at 14.21, the RSI (14) stands at 37.77%. The stock has reached -3.20 on the 9-day MACD Oscillator while the 14-day reading was at -23.32.

Analyst Ratings

Wells Fargo launched coverage on Adobe Inc. (NASDAQ: ADBE) in its analyst report released on September 20, 2021. The firm assigned the stock a an Overweight rating.The consensus rating for Adobe Inc. (ADBE) among analysts is Buy. According to current brokerage recommendations, 0 brokerage firms advise that investors sell ADBE, while 5 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 3 analysts, while 21 others rate it as a “buy”.

What is ADBE’s price target for the next 12 months?

Analysts predict a range of price targets between $600.00 and $800.00, with a median target of $711.50. Taking a look at these predictions, the average price target given by analysts for Adobe Inc. (ADBE) stock is $710.33.

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