Adobe Systems is a diversified software company worldwide. It operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. The Company offers products and services for professionals, marketers, application developers, enterprises and consumers for creating, managing, delivering, optimizing and engaging with content. The company was founded in 1982 and is based in San Jose, California.
ADBE Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for ADBE, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Adobe Inc ranked in the 38th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 31%. As for the metrics that stood out in our discounted cash flow analysis of Adobe Inc, consider:
The company has produced more trailing twelve month cash flow than 92.15% of its sector Technology.
The business' balance sheet reveals debt to be 3% of the company's capital (with equity being the remaining amount). Approximately only 8.95% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
ADBE's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 53.82% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Technology that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as ADBE, try ALRM, EXLS, PLAB, GLOB, and ROG.
Investment Thesis Adobe (ADBE) has seen its share price roar all the way back to all-time highs. While I continue to be bullish its prospects, I am somewhat less bullish shareholders' upside potential. Having said that, Adobe is still one of the best companies in this space, and on that...
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