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

In the latest market close, Adobe Systems (ADBE) reached $567.98, with a -0.52% movement compared to the previous day. The stock trailed the S&P 500, which registered a daily loss of 0.12%. Meanwhile, the Dow experienced a drop of 0.25%, and the technology-dominated Nasdaq saw a decrease of 0.41%.

Heading into today, shares of the software maker had lost 10.06% over the past month, lagging the Computer and Technology sector's gain of 6.12% and the S&P 500's gain of 4.83% in that time.

The investment community will be paying close attention to the earnings performance of Adobe Systems in its upcoming release. The company is slated to reveal its earnings on March 14, 2024. On that day, Adobe Systems is projected to report earnings of $4.38 per share, which would represent year-over-year growth of 15.26%. Meanwhile, our latest consensus estimate is calling for revenue of $5.13 billion, up 10.19% from the prior-year quarter.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $17.89 per share and a revenue of $21.41 billion, indicating changes of +11.33% and +10.33%, respectively, from the former year.

Investors might also notice recent changes to analyst estimates for Adobe Systems. 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.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.01% upward. Currently, Adobe Systems is carrying a Zacks Rank of #2 (Buy).

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In the context of valuation, Adobe Systems is at present trading with a Forward P/E ratio of 31.92. This denotes a discount relative to the industry's average Forward P/E of 32.5.

One should further note that ADBE currently holds a PEG ratio of 2.45. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As of the close of trade yesterday, the Computer - Software industry held an average PEG ratio of 2.45.

The Computer - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 50, this industry ranks in the top 20% of all industries, numbering over 250.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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