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New Lifetime High Reached: Adobe Systems (ADBE)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Adobe Systems ( ADBE) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Adobe Systems as such a stock due to the following factors:

  • ADBE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $251.7 million.
  • ADBE has traded 100,052 shares today.
  • ADBE is trading at a new lifetime high.

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More details on ADBE:

Adobe Systems Incorporated operates as a diversified software company worldwide. It operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. ADBE has a PE ratio of 109.5. Currently there are 9 analysts that rate Adobe Systems a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Adobe Systems has been 3.7 million shares per day over the past 30 days. Adobe Systems has a market cap of $30.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.36 and a short float of 1.2% with 1.47 days to cover. Shares are up 5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Adobe Systems as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • ADBE's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ADBE has a quick ratio of 2.47, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for ADOBE SYSTEMS INC is currently very high, coming in at 92.31%. Regardless of ADBE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADBE's net profit margin of 6.27% is significantly lower than the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Software industry and the overall market, ADOBE SYSTEMS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $314.98 million or 33.50% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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