Adobe Inc. (ADBE) stock analysis

P/E below its 5-year median

Adobe's P/E of 13.3 is below its own 5-year median of 37.2.

P/E below the industry

Adobe's P/E of 13.3 is below the Computer Programming, Data Processing, and Other Computer Related Services median of 27.6.

EV/EBITDA below its 5-year median

Adobe's EV/EBITDA of 8.8 is below its 5-year median of 24.7.

P/B above the industry

Adobe's price-to-book of 7.86 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 3.32.

Trading below fair value

The share price of $237.60 is below our fair value estimate of $577.01.

Margin of safety over 20%

The price is 58.8% below fair value, more than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 10.5% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 18.2% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 4.7% over the last twelve months, against a 5-year average of 6.3% a year.

Growing faster than the industry

Revenue grew 12.0% over the last twelve months; the Computer Programming, Data Processing, and Other Computer Related Services median is 9.6%.

Guidance raised

Adobe raised its fourth quarter FY2026 Creative & Marketing Professionals subscription revenue outlook on Sep 10, 2026.

Gross margin improving

Gross margin was 89.3% over the last twelve months, against 89.1% a year earlier.

Return on equity over 15%

Return on equity was 61.9% over the last twelve months and averaged 38.9% over five years.

Return on capital over 10%

Return on invested capital was 107%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Adobe's return on equity of 61.9% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -1.2%.

Earnings grew over 5 years

Net income grew 6.3% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 28.0% over the last twelve months, against a 5-year average of 28.3%.

Net margin above the industry

Adobe's net margin of 28.0% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -4.8%.

Low debt

Debt is 13.6% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 31.0% five years ago to 13.6%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 677% of total debt.

Interest well covered

Operating income covers interest expense 35.7 times.

Short-term assets don't cover short-term debts

Current assets are 0.77 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 7.19; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Adobe has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.