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Here's Why Adobe Systems (ADBE) Fell More Than Broader Market

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The most recent trading session ended with Adobe Systems (ADBE - Free Report) standing at $551, reflecting a -1.05% shift from the previouse trading day's closing. The stock fell short of the S&P 500, which registered a loss of 0.71% for the day. Meanwhile, the Dow experienced a drop of 0.93%, and the technology-dominated Nasdaq saw a decrease of 0.81%.

The software maker's shares have seen an increase of 6.48% over the last month, surpassing the Computer and Technology sector's loss of 3.88% and the S&P 500's gain of 1.08%.

Analysts and investors alike will be keeping a close eye on the performance of Adobe Systems in its upcoming earnings disclosure. The company's earnings per share (EPS) are projected to be $4.53, reflecting a 10.76% increase from the same quarter last year. Simultaneously, our latest consensus estimate expects the revenue to be $5.37 billion, showing a 9.72% escalation compared to the year-ago quarter.

For the full year, the Zacks Consensus Estimates are projecting earnings of $18.16 per share and revenue of $21.45 billion, which would represent changes of +13.01% and +10.52%, respectively, from the prior year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Adobe Systems. These revisions help to show the ever-changing nature of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.04% higher. Right now, Adobe Systems possesses a Zacks Rank of #3 (Hold).

In terms of valuation, Adobe Systems is presently being traded at a Forward P/E ratio of 30.66. Its industry sports an average Forward P/E of 29.94, so one might conclude that Adobe Systems is trading at a premium comparatively.

It is also worth noting that ADBE currently has a PEG ratio of 2.35. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ADBE's industry had an average PEG ratio of 2.45 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 141, this industry ranks in the bottom 45% of all industries, numbering over 250.

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.

To follow ADBE in the coming trading sessions, be sure to utilize Zacks.com.


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