Adobe Earnings Breakdown

Adobe () reported adjusted EPS of $4.81 in Q3, exceeding market estimates of $4.67. The company has beat street estimates in each of the last 8 quarters.(Click on image to enlarge)
Results came in 3% higher than expectations, which is about in line with the 8 quarter average (orange line).(Click on image to enlarge)
Earnings grew 13% over last year, which is below the 8 quarter average of 16% (orange line). Earnings growth has slowed for the 5th straight quarter now.(Click on image to enlarge)
Sales came in at $5.61 billion, which exceeded expectations of $5.54 billion. Adobe has also beat street estimates for sales over the last 8 quarters.(Click on image to enlarge)
Sales came in 1.2% above street estimates, which happens to be the biggest beat in the last 8 quarters and well above the recent average of 0.7%.(Click on image to enlarge)
Sales grew 11% over last year, same as last quarter and right in line with the 8 quarter average.(Click on image to enlarge)Forward guidance was a bit shy of market expectations. The market is currently pricing in about 11% EPS growth over the next 4 quarters, on a forward price to earnings (PE) ratio of 23.8 based on this mornings opening price. The stock is still trading below its 2021 high of $699, but well off its bear market low. The stock pulled back to its 50% retracement level earlier this year and appears to be inside what looks like a “triangle” chart pattern. It’s testing the lower end of the triangle on todays 10% gap down. A breakdown could retest May’s lows, but as long as those lows hold I’ll give this current rally the benefit of the doubt.The stock is negative YTD in a year when the S&P 500 is up 25%+. I don’t like that. If you’re a shorter term momentum trader, there are much better options. On an investing time frame, I’m not really that excited about it either. It’s a pretty solid, stable company that is trading at a discount to the “mag 7” type tech stocks. But its another one with average growth that’s currently trading at above average valuations. EPS growth is slowing, and sales growth seems to have plateaued in the 10-12% range. Which isn’t bad. The EPS & sales beats were impressive but offset by the disappointing sales guidance.More By This Author: