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Adobe Systems (ADBE) closed at $657.41 in the latest trading session, marking a -1.86% move from the prior day. This change lagged the S&P 500's 1.18% loss on the day. Meanwhile, the Dow lost 1.34%, and the Nasdaq, a tech-heavy index, lost 0.92%.
Heading into today, shares of the software maker had gained 4.6% over the past month, outpacing the Computer and Technology sector's gain of 0.24% and the S&P 500's loss of 0.73% in that time.
Adobe Systems will be looking to display strength as it nears its next earnings release, which is expected to be December 16, 2021. The company is expected to report EPS of $3, up 6.76% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $4.08 billion, up 19.13% from the year-ago period.
It is also important to note the recent changes to analyst estimates for Adobe Systems. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.
Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.05% lower. Adobe Systems currently has a Zacks Rank of #4 (Sell).
Digging into valuation, Adobe Systems currently has a Forward P/E ratio of 53.76. Its industry sports an average Forward P/E of 36.11, so we one might conclude that Adobe Systems is trading at a premium comparatively.
We can also see that ADBE currently has a PEG ratio of 2.82. 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. The Computer - Software industry currently had an average PEG ratio of 2.92 as of yesterday's close.
The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 155, which puts it in the bottom 39% of all 250+ industries.
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.
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