Rating Change #2
Adobe Systems Inc (ADBE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Although ADBE's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.84, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ADOBE SYSTEMS INC is currently very high, coming in at 95.20%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ADBE's net profit margin of 15.10% significantly trails the industry average.
- ADOBE SYSTEMS INC's earnings per share declined by 34.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ADOBE SYSTEMS INC increased its bottom line by earning $1.65 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($2.43 versus $1.65).
Adobe Systems Incorporated operates as a diversified software company in the Americas, Europe, the Middle East, Africa, and Asia. The company has a P/E ratio of 17.1, equal to the average computer software & services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Adobe Systems has a market cap of $13.88 billion and is part of the technology sector and computer software & services industry. Shares are up 0.7% year to date as of the close of trading on Friday.You can view the full Adobe Systems Ratings Report or get investment ideas from our investment research center.
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