10Y annualized return is
excellent
at 17.2% per year
ADBE has met or exceeded earnings expectations in
all
recent quarters (10/10)
Strong Gross Profit Margin
High Return on Equity
Strong Net Profit Margin
High Operating Profit Margin
Low Debt Levels
Strong Interest Coverage
Strong Revenue Growth
Market Leadership in Digital Experience
Innovative AI Integrations
Potential for Growth in AI and New Offerings
Focus on Integrated Solutions
High Price-to-Earnings Ratio
Elevated Price-to-Sales Ratio
Current Ratio Just Above 1
Mixed User Adoption Signals
Guidance Indicates Slowing Growth
Adobe demonstrates strong business quality with its market leadership, innovative AI capabilities, and record revenue growth. However, it faces challenges with user adoption rates and growth deceleration in its guidance for future performance. The future prospects remain positive due to new offerings and integrated solutions but are tempered by concerns over slowing growth.
Analysis Date: December 11, 2024
Last Updated: March 11, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Adobe Inc. is a company that creates software to help people and businesses make and share content. They offer popular products like Creative Cloud, which lets users access tools for design, video editing, and photography on a subscription basis. Additionally, Adobe provides services that help companies manage how they connect with their customers online. Overall, Adobe makes it easier for individuals and businesses to create, publish, and promote their work.
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$244.71
Current Market Price: $341.22
IV/P Ratio: 0.72x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-39.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for ADBE
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (22.54)
P/B ratio ≤ 1.5 (11.62)
Current ratio ≥ 2.0 (1.18x)
Long-term debt < Net current assets (0.20x)
Margin of safety (-39.0%)
ADBE does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
47.72%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
88.96%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
30.63%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
ADBE's net profit margin of 25.85% indicates that the company retains a significant portion of revenue as profit, showcasing its ability to manage costs and expenses effectively.
The operating profit margin of 35.996% indicates that ADBE maintains a strong control over its operating expenses relative to its revenue.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.03x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q1 2025
Current Ratio
Current assets divided by current liabilities
1.18x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q1 2025
ADBE's debt-to-equity ratio of 0.43 indicates a conservative approach to leverage, suggesting that the company is not overly reliant on debt to finance its operations.
With an interest coverage ratio of 65.05, ADBE has ample earnings to cover its interest obligations, indicating strong financial stability.
The current ratio of 1.07 indicates that while ADBE can cover its short-term liabilities, the margin is thin, which could be a concern if unexpected expenses arise.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Adobe achieved a record revenue of $21.51 billion in FY2024, representing an 11% year-over-year growth, indicating strong demand for its products.
Adobe's Digital Experience business crossed $5 billion in revenue, making it a critical provider of marketing technology, with 48 of the Fortune 100 companies leveraging its solutions.
Adobe's commitment to integrating AI, such as the Adobe Firefly family and AI Assistant, has driven significant user engagement and productivity, with Firefly reaching over 16 billion generations.
Despite strong revenue numbers, there are concerns regarding the growth of digital media net new ARR, which grew only 2% in Q4, raising questions about user retention and acquisition.
Adobe is set to expand its offerings with new tiered subscription models and higher-priced Firefly services, which could enhance monetization and attract new users.
The launch of Gen Studio aims to unify creative and experience clouds, tapping into the growing demand for integrated marketing solutions, which presents a significant market opportunity.
The guidance for FY2025 suggests decelerating growth compared to FY2024, which may concern investors about the sustainability of Adobe's growth trajectory.