Adobe’s (ADBE) second quarter financial results were promising, with strong revenue growth across all regions. The stock has recently been upgraded from neutral to buy in our proprietary rating system. Therefore, it might be worth adding this stock to your watchlist. continue reading….
Adobe Inc. ,adbe) operates as a diversified software company internationally. It operates through three segments: Digital Media, Digital Experience and Publishing & Advertising. The stock has closed its previous trading session at $391.96, up 1.1% over the past one month.
“Adobe achieved record Q2 revenue with strong demand in Creative Cloud, Document Cloud and Experience Cloud,” said Shantanu Narain, President and CEO. He also said, “We delivered another quarter of strong financial results with over $2 billion in operating cash flow, demonstrating the strength of Adobe’s growing revenue streams and financial discipline.”
Given ADBE’s solid financial position, our ownership power rating The system upgraded the stock from neutral to buy.
Here’s what could shape ADBE’s performance in the near future:
Last month, ADBE announced innovations for its customer data platform (CDP), Adobe Real-Time CDP, to help brands transition from third-party cookies to first-party data. As businesses across all industries adopt Adobe Real-Time CDP, ADBE Commerce is offering richer customer profiles with AI-powered targeting, new privacy and security tools, and segment match across channels.
In addition, last month ADBE expanded its partnership with Home Depot to improve the customer experience. As part of the company’s interconnected retail strategy, a seamless experience extends to e-commerce, an award-winning mobile app, and in-store services such as pickup lockers and in-app product locators. With so many touchpoints, the ADBE partnership will provide comprehensive insight into the customer journey.
ADBE’s total revenue for the second quarter ended June 3, 2022 increased 14.4% year-on-year to $4.39 billion. its non-GAAP operating income It rose 12% from its year-ago value to $1.97 billion, while its non-GAAP net income rose to $1.59 billion, up 8.9% from the prior-year quarter. The company’s non-GAAP EPS increased 10.6% year-over-year to $3.35.
ADBE’s net income margin for the past 12 months is 29.29%, which is 534.3% higher than the industry average of 4.62%. In addition, its previous 12-month gross profit margin of 87.87% is 50.7% higher than the industry average of 73.40%. In addition, its previous-12-month ROE, ROC, and ROA are 416.3%, 389.2%, and 536.9% higher than the respective industry averages.
impressive growth prospects
The Street expects ADBE’s revenue to grow 11.9% in the current year and 13.9% next year. The company’s EPS is expected to grow at 7.1% in the current quarter, 8.3% in the current year and 17.2% in the next year.
Further, ADBE’s EPS is expected to grow at a CAGR of 14.2% over the next five years. Furthermore, the company has an astonishing history of impressive earnings; It topped the consensus EPS estimates in each of the last four quarters.
Consensus ratings and price targets indicate potential upside
Of the 21 Wall Street analysts who rated ADBE, 17 rated it as buy and four rated it as hold. A 12-month average price target of $458.67 indicates a 17% potential upside, The price target is from the $362.00 low to $550.00 high.
Power rating shows solid prospects
ADBE has an overall B grade, the equivalent of a buy in our proprietary power rating system. The POWR rating is calculated by considering 118 different factors, each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. ADBE has A grade for quality and B for sentiment. ADBE’s high profitability over the industry is commensurate with its quality grade. In addition, the year-over-year growth indicated by consensus earnings projections justifies its sentiment grade.
Out of 154 stocks in F-rated software application Industry, ADBE is ranked 31st.
In addition to what I said above, we have classified ADBE for growth, value, stability and momentum. GET ALL ADBE RATINGS Here,
ADBE’s strong financial performance, impressive revenue growth across segments, and various service and product innovations will drive the stock’s performance. Therefore, we think it might be wise to add the stock to your watchlist.
Adobe Inc. How does (ADBE) stack up against its peers?
ADBE has an overall POWR rating of B, which is equivalent to a buy. Check out these other stocks within the software – apps industry with an A (strong buy) rating: Rimini Street Inc. ,rmni), American Software, Inc. ,amswa), and IBEX Limited (ibex,
Shares of ADBE were trading at $379.73 per share, down by $12.23 (-3.12%) on Tuesday afternoon. Year-over-year, ADBE is down -33.04%, while the benchmark S&P 500 index has gained -17.04% during the same period.
About the Author: Spandan Khandelwal
Spandan is a financial journalist and investment analyst focused on the stock market. Along with their ability to interpret financial data, they aim to help investors evaluate a company’s fundamentals before investing.
Post 1 Upgraded Software Stock to Add to Your Watchlist first appeared StockNews.com