Adobe Systems Inc. (ADBE, Financial) – the U.S. multibillion-dollar and multinational computer software company headquartered in San Jose, California –Â will release its financial numbers for the third quarter of fiscal 2017 after market close Sept. 19.
For the quarter in question Adobe Systems is expected to close the reporting period showing at the bottom line of its income statement an EPS of $1.01. This is an average figure from 98 cents per share to $1.06 per share estimates’ range. Twenty-nine analysts were surveyed on Adobe Systems’ third-quarter earnings.
The average figure of $1.01 is a 35% increase from the EPS of one year ago. In the chart below you can see analysts’ estimates on Adobe Systems’ EPS, averages, ranges’ limits and figures on past earnings, provided by Yahoo Finance.
Source: Yahoo Finance
Estimates on third-quarter earnings have been produced on revenue that is expected to come in – as shown by the chart below – at $1.82 billion. This is an average figure and represents a solid 24.20% increase on a year-over-year basis.
Twenty-six analysts were surveyed on Adobe Systems’ revenue for the third quarter of fiscal 2017. The estimates range between a low of $1.79 billion and a high of $1.84 billion.
Source: Yahoo Finance
Should Adobe Systems meet or even beat analysts’ expectations on both earnings and revenue, its market value will for sure have a significant impact on the stock market.
Adobe Systems is trading at $154.49 per share on Nasdaq and has a market capitalization of $76.23 billion. The U.S. global software giant has a price-earnings (P/E) ratio of 53.46 and a price-book (P/B) ratio of 9.77 and is trading its sales – computed on the last 12 months’ time frame – at 11.68 times.
The forward P/E ratio is 31.06 while the EPS – as forecasted by analysts for full-fiscal 2017 and full-fiscal 2018 – is $4.06 and $5.01.
If we multiply the forward P/E ratio by the forecast EPS for full-fiscal 2018, we obtain a value of $155.61 per share, which is slightly above the current valuation the market gives to Adobe Systems.
The U.S. software company is currently trading below its 52-week high of $157.89 per share (the 52-week low is $98 per share) and at about a 4.2% discount of the average target price of $161.20. Even though the average analyst doesn’t foresee a significant upside in the market value of Adobe Systems over the following trading months, for the analysts Adobe Systems is a buy since the recommendation rating is 1.9 out of 5.
As of the most recent quarter, Adobe Systems has approximately $4.93 billion in cash on hand and securities or $9.99 per share. Total current assets and liabilities are valued $6.05 billion and $3.05 billion, for a current ratio of 1.98 versus an industry average of 1.26. The company has $1.89 billion in total debt for a debt-equity ratio of 24.20%. Adobe Systems is one of the less leveraged software companies in the industry since its peers have on average a total debt-equity ratio of 106.26%.
Over the 12 trailing months’ period, Adobe Systems’ operations have generated $2.6 billion cash flow and $2.08 billion net of capex and debt obligations repayment. The latter figure is the levered free cash flow available to Adobe Systems for business growth purposes allocations.
Disclosure: I have no positions in Adobe Systems.
