Are Adobe Inc (ADBE) Shares Trading Below Fair Value?
Investors Observer gives Adobe Inc (ADBE) a low review score of 26 based on its analysis. The proprietary rating system takes into account the underlying health of a company by analyzing its stock price, earnings and rate of growth. ADBE currently holds a better value than 26% of the shares based on these metrics. Long-term buy and hold investors should find the most relevant valuation ranking system when making investment decisions.
ADBE has a 12-month price-to-earnings (PE) ratio of 51.8. The historical average of around 15 shows low value for ADBE stock as investors pay higher stock prices relative to company earnings. ADBE’s high PE ratio shows that the company has recently traded above its fair market value. Its 12-month rolling earnings per share (EPS) of 12.08 does not justify the current share price. However, leakage PE ratios do not take into account the company’s projected growth rate, so many newer companies have high PE ratios due to high growth potential attracting investors despite insufficient profits. ADBE’s 12-month PEG-to-growth ratio (PEG) of 3.35 is considered mediocre as the market overstates ADBE relative to the company’s expected earnings growth. ADBE’s PEG is derived from its forward price / earnings ratio divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and the stock price. Due to their integration of more fundamentals of the overall health of a company and their focus on the future rather than the past, PEG ratios are one of the most widely used valuation metrics by analysts today. ‘hui.
ADBE ‘has a low valuation at its current price due to an overvalued PEG ratio despite strong growth. ADBE’s PE and PEG are below the market average, resulting in a below-average valuation score. Click here for the full Adobe Inc (ADBE) inventory report.