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Adobe (ADBE) Owner Earnings per Share (TTM)

: 10.19 (As of Feb. 2024)
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In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

Adobe's Owner Earnings per Share (TTM) ended in Feb. 2024 was $10.19. It's Price-to-Owner-Earnings ratio for today is 45.64.


The historical rank and industry rank for Adobe's Owner Earnings per Share (TTM) or its related term are showing as below:

ADBE' s Price-to-Owner-Earnings Range Over the Past 10 Years
Min: 20.49   Med: 42.94   Max: 68.05
Current: 45.62


During the past 13 years, the highest Price-to-Owner-Earnings ratio of Adobe was 68.05. The lowest was 20.49. And the median was 42.94.


ADBE's Price-to-Owner-Earnings is ranked worse than
73.44% of 994 companies
in the Software industry
Industry Median: 22.665 vs ADBE: 45.62

Adobe's Earnings per Share (Diluted) for the three months ended in Feb. 2024 was $1.36. Its Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Feb. 2024 was $10.46. It's PE Ratio ratio for today is 44.46.

Adobe's EPS without NRI for the three months ended in Feb. 2024 was $4.48. Its EPS without NRI for the trailing twelve months (TTM) ended in Feb. 2024 was $15.65. It's PE Ratio without NRI ratio for today is 29.71.


Adobe Owner Earnings per Share (TTM) Historical Data

The historical data trend for Adobe's Owner Earnings per Share (TTM) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Adobe Annual Data
Trend Nov14 Nov15 Nov16 Nov17 Nov18 Nov19 Nov20 Nov21 Nov22 Nov23
Owner Earnings per Share (TTM)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.08 9.27 12.10 12.76 11.29

Adobe Quarterly Data
May19 Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23 May23 Aug23 Nov23 Feb24
Owner Earnings per Share (TTM) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 12.63 12.71 12.96 11.29 10.19

Competitive Comparison

For the Software - Infrastructure subindustry, Adobe's Price-to-Owner-Earnings, along with its competitors' market caps and Price-to-Owner-Earnings data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Adobe Price-to-Owner-Earnings Distribution

For the Software industry and Technology sector, Adobe's Price-to-Owner-Earnings distribution charts can be found below:

* The bar in red indicates where Adobe's Price-to-Owner-Earnings falls into.



Adobe Owner Earnings per Share (TTM) Calculation

In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

To make it simple, then you will have:

Owner Earnings per Share (TTM) = (Net Income + Depreciation, Depletion and Amortization + Change In Deferred Tax - 5Y Average of Maintenance Capital Expenditure + Change In Working Capital) / Shares Outstanding (Diluted Average)

Adobe's Owner Earnings per Share (TTM) Calculation:

TTM / Last Quarter Average of Last 20 Quarters
Net Income 4,801
Depreciation, Depletion and Amortization 872
Change In Deferred Tax -493
5Y Average of Maintenance Capital Expenditure 329
Change In Working Capital -202
Shares Outstanding (Diluted Average) 456

1. Start with "Net Income" from income statement. Adobe's Net Income for the trailing twelve months (TTM) ended in Feb. 2024 was $4,801 Mil.

2. "Depreciation, Depletion and Amortization" is from cashflow statement. Adobe's Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Feb. 2024 was $872 Mil. This needs to be added back because company does not actually need to pay cash for it. It is a non-cash item.

3. Other non-cash charges usually include "Stock Based Compensation" and "Change In Deferred Tax":
However, to be conservative, GuruFocus will not add Stock Based Compensation back to net income. Adobe's Change In Deferred Tax for the trailing twelve months (TTM) ended in Feb. 2024 was $-493 Mil.

4. Average maintenance capital expenditure over a business/industry cycle: 5-Year Average Maintenance Capital Expenditure = $329 Mil

It is usually best to take a long-term average of maintenance capital expenditure. Ideally this would be as long as 10 years and include at least one economic downturn. However, since many companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year maintenance capital expenditure.

The following shows how to get maintenance capital expenditure.

First, calculate the revenue change regarding to the previous quarter. If the revenue decreased from the previous quarter, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous quarter, then calculate the percentage of Net PPE as of corresponding Revenue.
Growth Capital Expenditure = Percentage of Property, Plant and Equipment as of corresponding Revenue * Revenue Increase
Third, calculate Capital Expenditure (positive) - Growth Capital Expenditure.
If [Capital Expenditure (positive) - Growth Capital Expenditure] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - Growth Capital Expenditure] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - Growth Capital Expenditure.
Fourth, get the average of the 5 years maintenance capital expenditure.

Adobe's 5-Year Average Maintenance Capital Expenditure = $329 Mil

5. "Change In Working Capital" is from cashflow statement. Adobe's Change In Working Capital for the trailing twelve months (TTM) ended in Feb. 2024 was $-202 Mil.
Note: GuruFocus' Change in Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And sometimes it includes non-current parts of assets and liabilities.

6. Adobe's Shares Outstanding (Diluted Average) for the months ended in Feb. 2024 was 456.000 Mil.

Adobe's Onwer Earnings Per Share for Feb. 2024 is calculated as:

Owner Earnings per Share (TTM)
=( Net Income+Depreciation, Depletion and Amortization+Change In Deferred Tax
=( 4801 +872+-493
-5Y Avg of Maintenance CAPEX+Change In Working Capital )/Shares Outstanding (Diluted Average)
-329.43833751102+-202)/456.000
=10.19

Price-to-Owner-Earnings=Current Price/Owner Earnings per Share (TTM)
=465.03/10.19
=45.64

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Be Aware

Assumption: Companies usually do not report maintenance capital expenditures and growth capital expenditures separately. Here we use estimated numbers and average them over 5 years. The method to estimate maintenance capital expenditures can be found in above part 4.

Note: GuruFocus' Change In Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And it includes non-current parts of assets and liabilities.


Adobe Owner Earnings per Share (TTM) Related Terms

Thank you for viewing the detailed overview of Adobe's Owner Earnings per Share (TTM) provided by GuruFocus.com. Please click on the following links to see related term pages.


Adobe (ADBE) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Technology » Software » Adobe Inc (NAS:ADBE) » Definitions » Owner Earnings per Share (TTM)
Address
345 Park Avenue, San Jose, CA, USA, 95110-2704
Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers for creating, managing, delivering, measuring, optimizing and engaging with compelling content multiple operating systems, devices and media. The company operates with three segments: digital media content creation, digital experience for marketing solutions, and publishing for legacy products (less than 5% of revenue).
Executives
Mark S. Garfield officer: VP, CAO & Corp. Controller 345 PARK AVENUE, SAN JOSE CA 95110-2704
Amy Banse director 345 PARK AVENUE, SAN JOSE CA 95110
David Wadhwani officer: SVP & GM, Digital Media ADOBE INC., 345 PARK AVE, SAN JOSE CA 95110
Shantanu Narayen director, officer: President and CEO 345 PARK AVENUE, SAN JOSE CA 95110
Daniel Durn officer: EVP and CFO C/O APPLIED MATERIALS, INC., 3050 BOWERS AVENUE, P.O. BOX 58039, SANTA CLARA CA 95052-8039
Scott Belsky officer: EVP, Chief Product Officer 345 PARK AVENUE, SAN JOSE CA 95110
Cristiano R Amon director 5775 MOREHOUSE DRIVE, SAN DIEGO CA 92121
John E Warnock director, other: Co-Chairman of the Board C/O ADOBE SYSTEMS INC, 345 PARK AVENUE P O BOX 2704, SAN JOSE CA 95110-2704
Dana Rao officer: EVP, Gen. Counsel & Secretary 345 PARK AVE, SAN JOSE CA 95110
Ann Lewnes officer: SVP, Chief Marketing Officer 345 PARK AVENUE, SAN JOSE CA 95110
David A Ricks director LILLY CORPORATE CENTER, INDIANAPOLIS IN 46285
M. Brett Biggs director 702 SW 8TH STREET, BENTONVILLE AR 72716
Laura Desmond director 345 PARK AVENUE, SAN JOSE CA 95110
Spencer Adam Neumann director SIERRA INCOME CORPORATION, 375 PARK AVE., SUITE 3304, NEW YORK NY 10152
Gloria Chen officer: EVP, Strategy & Growth 345 PARK AVENUE, SAN JOSE CA 95110

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