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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Adobe Inc. (XNAS:ADBE) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ADBE
Name:
ADOBE INC. (XNAS:ADBE)
Sector:
6.88B
Industry:
Software�Infrastructure
CEO:
Mr. Shantanu Narayen
Total Employees:
25,988
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 165.90% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ADOBE INC.(ADBE) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SOFTWARE�INFRASTRUCTURE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
368.14
One Month Price Target:
$370.49
Six Month Price Target :
$382.24
Likely Price in One Year's Time:
Ticker:
$396.35
Likely Trading Range Today Under (Normal Volatility)
$366.78
Price Upper limit ($) :
$369.95
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$349.2
This week:
$325.8
This month :
$283.45
Other Primary facts
Market Cap:
172.36B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
468.00M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
17.72%
-14.75%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$455.99
$415.56
$280.29
$320.72
Medium risk (<10%) entry points
Buy Call
Sell Call
$402.40
Buy Put:
Sell Put:
$393.76
$333.77
$342.52
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ADBE
Sharpe Ratio:
2.02%
Comparison:
ADBE, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 23.83% higher than the industry
& is -11.17% lower than the market/S&P 500 average
Average Returns/Yield of
ADBE
Daily returns:
0.06%
Weekly returns:
0.30%
Monthly returns:
1.20%
Yearly returns:
14.38%
Comparison of returns:
Average annual returns/yield (last 3 years) is 0.37% above industry average
Classification:
ADBE, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.22
Statistical test of Returns:
ADBE has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.53%
Weekly Volatility:
5.67%
Monthly Volatility:
11.33%
Yearly Volatility:
39.26%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.32%
Volatility in last five trading days has been -87.45% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.14%
Weekly VaR:
-11.50%
Monthly VaR:
-23.00%
How Much Can the price of
ADBE
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-20%
Worst case (decline):
-79.69%
This translates to price declining to:
$295.79
This translates to price declining to:
$74.77
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
ADBE is a 62.36% riskier investment compared to the market/S&P 500 & is 39.10% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -23.95% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ADBE
Beta in relation to market/S&P 500--1.14
Expected beta in 1 year's time:
0.847
Expected beta in 3 year's time:
1.198
Unlevered (debt free) Beta:
0.908
Beta in relation to Nasdaq (XNAS):
1.178
Beta in relation to all global stocks::
0.758
Beta Comparison & Analysis
Beta of competitors/peers::
1.226
Beta is -7.00% lower than peers
Average Industry Beta:
1.112
Beta is 2.56% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
34.07%
Sustainable growth rate is -90.78% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.035
Alpha is -3.92% below industry average alpha yield
Alpha is 221% higher than market/& is unsustainably high
Analysis of Cost of Capital of
ADBE
Equity cost of capital:
0.110
Equity cost of capital is 1.81% above industry mean WACC
Unlevered (without debt) cost of capital:
8.73%
Before-tax cost of debt:
2.38%
After-tax cost of debt:
1.88%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.88%
WACC is 24.78% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$35.67
Revenue growth rate per share of (3Y):
11.64
Annual revenue growth rate is 9.40% above the industry average
EPS:
$10.24
Expected Annual growth rate of EPS (3Y):
18.38%
Expected future EPS growth rate is -38.99% lower than the Software�Infrastructure industry
Free cash flow (FCF) per share:
$14.44
-
-
Debt per share
$9.78
EBITDA per share
$14.65
Valuation Analysis Today of
ADBE
P/E Ratio:
35.96
P/E Ratio of Competitors/Peers:
22.74
P/E ratio is 58.10% higher than main peers & is -44.88% lower than the industry
Stock price/value with industry average P/E ratio: $668.01
ADBE is -44.89% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
10.32
Price to sales ratio is -6.02% below the industry mean
P/B (Price to book value ratio):
11.64
Price to free cash flow: 25.50
-
Net income growth rate (3Y):
91.41%
Net income growth rate is -98.92% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
30.93%
Net debt to equity ratio:
5.60%
Debt to assets ratio:
16.80%
Net debt to assets ratio:
3.04%
Debt-to-asset ratio is -75.91% below industry average
Ability to repay debt:
Interest coverage ratio:
61.76
Interest coverage ratio is -129.27% less than industry average
Looking forward:
Debt growth rate:
-0.74%
Annual debt growth is -101% lower than industry average debt growth rate
Debt repayment rate in previous year: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.753
Statistical significance of correlation:
ADBE has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.48
Stock price is 56.89% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.48
Correlation of price movement with Nasdaq (^IXIC):
-0.027
Covariance of price movement with the market:
-0.04
Kurtosis
6.396
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.055
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
ADBE
Gross Profit Margin Ratio:
351%
Operating Profit Margin Ratio:
36.25%
Operating profit margin is -405.41% lower than the industry
Net Profit Margin Ratio:
351%
Effective Tax Rate:
17.43%
Effective tax rate is -44.36% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
33.04%
Return on equity (ROE) is -69.05% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
17.95%
Return on assets (ROA) is -573.93% lower than the industry
Financial Leverage:
1.2x
Current Ratio:
1.25
Current ratio is -46.28% below industry average
Cash Conversion Cycle (days):
-17.6
Cash conversion cycle is -115.66% below industry average
The remaining useful life of property plant & equipment is: 7.9 years
Stock based compensation to net income ratio:
21.87%
In-depth Efficiency Analysis
Revenue generated per employee:
642.3K
Each employee generates 63% more revenue than industry average revenue per employee
EBITDA generated per employee:
263.8K
Each employee generates 304% more EBITDA than industry average revenue per employee
Profit generated per employee:
188.1K
Each employee generates 798% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
264.8K
Each employee generates 1238% more free cash flow than industry average revenue per employee
Assets/Capital per employee
714.6K
Each employee generates 1238% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 16.09%
Growth rate in R&D investment/expenditure is -720.41% lower than the industry
Competitors/Peer firms of
ADBE
Broadcom Inc. (XNAS:AVGO)
CISCO SYSTEMS, INC. (XNAS:CSCO)
INTEL CORPORATION (XNAS:INTC)
ASML Holding NV (XNAS:ASML)
TEXAS INSTRUMENTS INCORPORATED (XNAS:TXN)
INTUIT INC. (XNAS:INTU)
ADVANCED MICRO DEVICES, INC. (XNAS:AMD)
APPLIED MATERIALS, INC. (XNAS:AMAT)
MICRON TECHNOLOGY, INC. (XNAS:MU)
Current Analyst Ratings
Strong buy�46%
Buy�58%
Hold�25%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
6/3/22
Revenue:
16.69B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.03B
14.67B
2.75B
1.10B
5.70B
4.60B
167.00M
8.62B
-
111.00M
823.00M
6.86B
6.05B
4.89B
5.92B
1.03B
4.89B
Statement of Cash Flow
Date:
Period:
788.00M
Differed Income Tax :
183.00M
Stock Based Compensation :
1.07B
Change in Working Capital :
292.00M
Accounts Receivables:
- 430000.00K
Other Working Capital:
1.05B
Other Non-Cash Items:
76.00M
Net Cash Provided by Operating Activities:
7.23B
Investments in PP&E:
- 348000.00K
Net Acquisitions:
- 2682000.00K
Purchases of Investments:
- 1575000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
12/3/21
2021
FY
3.84B
1.95B
5.80B
1.88B
-
993.00M
8.67B
2.12B
12.67B
1.82B
-
1.09B
883.00M
18.57B
-
27.24B
312.00M
97.00M
173.00M
4.73B
1.79B
6.93B
4.58B
786.00M
5.51B
-
12.44B
-
23.91B
- 137000.0K
-
December 3, 2021 at 7:00:00 AM
10.64B
14.80B
27.24B
-
4.67B
829.0M
1.07B
-
- 3537000.00K
-
291.00M
- 3950000.00K
-
- 642000.00K
- 4301000.00K
- 26000.00K
- 634000.00K
3.84B
4.48B
7.23B
- 348000.00K
6.88B
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
ADBE
2023
2024
2025
2026
2027
$425.60
$458.21
$493.32
$531.12
$571.81