Adobe proves that contents creation, document management and digital advertising software and services to creative professionals and marketers. Its flagship products include Photoshop, Acrobat, Dreamweaver, Illustrator and InDesign.
The company reported strong fiscal third-quarter results, with both earnings and revenues rising year-over-year. Sales growth was driven by the company's Creative Cloud, Document Cloud and Experience Cloud offerings. ADBE is also benefiting from growth in emerging markets, strong online video creation demand and solid adoption of Acrobat.
In fact, Adobe continues to be a market leader in the digital media space. With advertising, entertainment and other types of content creation becoming digitalized, ADBE is poised to reap the benefits. For instance, it entered the digital marketing space with its acquisition of online marketing and web analytics firm Omniture. Digital marketing is one area when corporate spending is rising. This is due to the increased adoption of cloud computing, big data analytics and social media. These tailwinds should increase growth for ADBE over the long term.
The stock has an overall grade of B (Buy) in the POWR Ratings system. The company has a Sentiment Grade of B, which is in line with its analyst ratings. Of the 28 analysts tracking Adobe, 24 rate it a Buy or Strong Buy. And analysts peg potential upside at 25%, based on its average price target.
ADBE also has a Quality Grade of A, which isn't surprising with a low debt-to-equity ratio of 0.3, signaling very little debt leverage, and a current ratio of 1.4 that indicates Adobe is plenty capable of tackling its shorter-term liabilities. Management is also very efficient, with a return on equity of 40.5%.
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