Trade-Ideas: Adobe Systems (ADBE) Is Today's Pre-Market Laggard Stock

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 pre-market laggard 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 $286.1 million.
  • ADBE traded 22,300 shares today in the pre-market hours as of 8:07 AM.
  • ADBE is down 3.2% today from yesterday's close.

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More details on ADBE:

Adobe Systems Incorporated operates as a diversified software company worldwide. The company operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. ADBE has a PE ratio of 58.4. Currently there are 11 analysts that rate Adobe Systems a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Adobe Systems has been 3.2 million shares per day over the past 30 days. Adobe Systems has a market cap of $25.8 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.14 and a short float of 1.4% with 1.15 days to cover. Shares are up 36.5% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Adobe Systems as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, solid stock price performance 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:
  • ADBE's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.77, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, ADBE's share price has jumped by 60.15%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • ADBE, with its decline in revenue, underperformed when compared the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for ADOBE SYSTEMS INC is currently very high, coming in at 92.17%. 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 8.34% is significantly lower than the industry average.
  • ADOBE SYSTEMS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. Despite the past stability of earnings, the consensus estimate anticipates a weakening in earnings. During the past fiscal year, ADOBE SYSTEMS INC increased its bottom line by earning $1.66 versus $1.65 in the prior year. For the next year, the market is expecting a contraction of 18.9% in earnings ($1.35 versus $1.66).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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