Adobe Systems Profitability Analysis

ADBE
 Stock
  

USD 434.89  3.51  0.80%   

For Adobe Systems profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Adobe Systems to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Adobe Systems utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Adobe Systems's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Adobe Systems over time as well as its relative position and ranking within its peers. Please continue to Trending Equities.
  
Adobe Systems Sales per Share is projected to increase significantly based on the last few years of reporting. The past year's Sales per Share was at 18.39. As of August 11, 2022, Accumulated Other Comprehensive Income is expected to decline to about (152 M). In addition to that, Consolidated Income is expected to decline to about 2.5 B.

Adobe Systems Revenues

9.15 Billion

Is Adobe Systems' industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Adobe Systems. If investors know Adobe will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Adobe Systems listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
0.073
Market Capitalization
205.2 B
Quarterly Revenue Growth YOY
0.14
Return On Assets
0.15
Return On Equity
0.35
The market value of Adobe Systems is measured differently than its book value, which is the value of Adobe that is recorded on the company's balance sheet. Investors also form their own opinion of Adobe Systems' value that differs from its market value or its book value, called intrinsic value, which is Adobe Systems' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Adobe Systems' market value can be influenced by many factors that don't directly affect Adobe Systems' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Adobe Systems' value and its price as these two are different measures arrived at by different means. Investors typically determine Adobe Systems value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Adobe Systems' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

Adobe Systems Working Capital vs. Current Valuation Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Adobe Systems's current stock value. Our valuation model uses many indicators to compare Adobe Systems value to that of its competitors to determine the firm's financial worth.
Adobe Systems is the top company in current valuation category among related companies. It is rated second in working capital category among related companies reporting about  0.02  of Working Capital per Current Valuation. The ratio of Current Valuation to Working Capital for Adobe Systems is roughly  66.34 . Adobe Systems Working Capital is projected to decrease significantly based on the last few years of reporting. The past year's Working Capital was at 555.91 Million. Comparative valuation analysis is a catch-all model that can be used if you cannot value Adobe Systems by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for Adobe Systems' Stock . Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Adobe Systems' earnings, one of the primary drivers of an investment's value.

Adobe Current Valuation vs. Competition

Adobe Systems is the top company in current valuation category among related companies. After adjusting for long-term liabilities, total market size of Software—Infrastructure industry is presently estimated at about 240.57 Billion. Adobe Systems totals roughly 200.88 Billion in current valuation claiming about 84% of equities listed under Software—Infrastructure industry.

Adobe Working Capital vs. Current Valuation

Enterprise Value is a firm valuation proxy that approximates the current market value of a company. It is typically used to determine the takeover or merger price of a firm. Unlike Market Cap, this measure takes into account the entire liquid asset, outstanding debt, and exotic equity instruments that the company has on its balance sheet. When a takeover occurs, the parent company will have to assume the target company's liabilities but will take possession of all cash and cash equivalents.
Adobe Systems 
Enterprise Value 
 = 
Market Cap + Debt 
-  
Cash 
200.88 B
Enterprise Value can be a useful tool to compare companies with different capital structures. Long term liability and current cash or cash equivalents can have a huge impact on market valuation of a given company.
Working Capital is a measure of company efficiency and operating liquidity. The working capital is usually calculated by subtracting Current Liabilities from Current Assets. It is an important indicator of the firm ability to continue its normal operations without additional debt obligations. .
Adobe Systems 
Working Capital 
 = 
Current Assets 
Current Liabilities 
3.03 B
Working Capital can be positive or negative, depending on how much of current debt the company is carrying on its balance sheet. In general terms, companies that have a lot of working capital will experience more growth in the near future since they can expand and improve their operations using existing resources. On the other hand, companies with small or negative working capital may lack the funds necessary for growth or future operation. Working Capital also shows if the company has sufficient liquid resources to satisfy short-term liabilities and operational expenses.

Adobe Systems Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Adobe Systems, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Adobe Systems will eventually generate negative long term returns. The profitability progress is the general direction of Adobe Systems' change in net profit over the period of time. It can combine multiple indicators of Adobe Systems, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for 2022
Accumulated Other Comprehensive Income-148.1 M-152 M
Consolidated Income2.6 B2.5 B
Net Income2.6 B2.5 B
Net Income Common Stock2.6 B2.5 B
Operating Income2.8 B2.7 B
Income Tax Expense203 M178 M
Net Income Per Employee121.6 K103.6 K
Adobe Inc. operates as a diversified software company worldwide. Adobe Inc. was founded in 1982 and is headquartered in San Jose, California. Adobe Systems operates under SoftwareInfrastructure classification in the United States and is traded on NASDAQ Exchange. It employs 25988 people.

Adobe Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Adobe Systems. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Adobe Systems position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Adobe Systems' important profitability drivers and their relationship over time.

Adobe Systems Profitability Trends

Adobe Systems profitability trend refers to the progression of profit or loss within a business. An upward trend means that Adobe Systems' profit has generally increased over time, and a downward profitability trend means profits are declining. Recognizing problems early in profitability trends allows investors to address revenue and cost issues in advance. Investors and analysts usually monitor three types of profitability trends: gross, operating, and net. Gross profit is the difference between revenue and costs of goods sold. Operating profit is Adobe Systems' gross profit minus its overhead. After you account for other unusual revenue, expenses, and costs, you get net profit. Gross profit trends are often a good indicator of future profitability. If you have high gross profit margins, you have a better chance to cover overhead and make money.

Adobe Systems Profitability Drivers Correlations

One of the toughest challenges investors face today is learning how to quickly synthesize and read into endless financial statements and information provided by the company, SEC reporting, and various external parties. Understanding the correlation between Adobe Systems different financial indicators related to revenue and profit generation helps investors identify and prioritize their investing strategies towards Adobe Systems in a much-optimized way. Analyzing correlations between profit drivers that are directly associated with dollar figures is the most effective way to break down Adobe Systems' future profitability.

Use Adobe Systems in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Adobe Systems position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Adobe Systems will appreciate offsetting losses from the drop in the long position's value.

Adobe Systems Pair Trading

Adobe Systems Pair Trading Analysis

The ability to find closely correlated positions to Adobe Systems could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Adobe Systems when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Adobe Systems - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Adobe Systems to buy it.
The correlation of Adobe Systems is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Adobe Systems moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Adobe Systems moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Adobe Systems can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your Adobe Systems position

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Please continue to Trending Equities. Note that the Adobe Systems information on this page should be used as a complementary analysis to other Adobe Systems' statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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To fully project Adobe Systems' future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Adobe Systems at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Adobe Systems' income statement, its balance sheet, and the statement of cash flows.
Potential Adobe Systems investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Adobe Systems investors may work on each financial statement separately, they are all related. The changes in Adobe Systems's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Adobe Systems's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.