The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$3,575.37||$4,138.68||$4,464.43||$5,398.00||$6,159.00|
|Source||Analyst x21||Analyst x21||Analyst x3||Analyst x1||Analyst x1|
Discounted (@ 9.65%)
Present value of next 5 years cash flows:
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $6,159 × (1 + 2.47%) ÷ (9.65% – 2.47%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
$73,120 = $17,707 + $55,413
Value = Total value / Shares Outstanding ($73,120 / 492)Discount to Share Price
Value per share:
Current discount (share price of $202.09): -35.86%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 9.65% = 2.47% + (0.954 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($99,343,104,925).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.954 = 0.943 (1 + (1- 40%) (1.9%))
Levered Beta used in calculation = 0.954
Mr. Shantanu Narayen serves as Senior Advisor at KKR & Co. L.P. Mr. Narayen serves as Chief Executive Officer of Adobe and President of Adobe at Adobe Systems India Pvt. Ltd. He serves as Director at Stario, Inc. He serves as Chairman, President & CEO at Adobe Systems Incorporated. He serves as Chief Executive Officer, President and Director at Adobe Systems Software Ireland Limited. He serves as Independent Director at Pfizer Inc. He previously served as Chief Executive Officer of Adobe and President of Adobe at Omniture, Inc. He previously served as Director at Metavante Technologies, Inc. He previously served as Former Independent Director at Dell Inc.
Average tenure and age of the Adobe Systems management team in years:
Average tenure and age of the Adobe Systems board of directors in years:
Adobe Systems Incorporated (NASDAQ:ADBE) is considered a high-growth stock, but its last closing price of $201.56 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. … This tells us that Adobe Systems is overvalued compared to the US market average ratio of 18.99x , and overvalued based on current earnings compared to the software industry average of 33.36x. … This tells us that when we include its growth in our analysis Adobe Systems's stock can be considered overvalued , based on the fundamentals.Simply Wall St - – Full article
I am going to run you through how I calculated the intrinsic value of Adobe Systems Incorporated (NASDAQ:ADBE) by taking the expected future cash flows and discounting them to their present value. … 5-year cash flow forecast 2018 2019 2020 2021 2022 Levered FCF ($, Millions) $3,575.37 $4,138.68 $4,464.43 $5,398.00 $6,159.00 Source Analyst x21 Analyst x21 Analyst x3 Analyst x1 Analyst x1 Present Value Discounted @ 9.63% $3,261.35 $3,443.60 $3,388.39 $3,737.11 $3,889.46 Present Value of 5-year Cash Flow (PVCF)= $17,720 We now need to calculate the Terminal Value, which accounts for all the future cash flows after the five years. … Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = $6,159 × (1 + 2.5%) ÷ (9.6% – 2.5%) = $88,160 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = $88,160 / ( 1 + 9.6%)5 = $55,674 The total value is the sum of cash flows for the next five years and the discounted terminal value, which results in the Total Equity Value, which in this case is $73,394.Simply Wall St - – Full article
Adobe Systems Incorporated (NASDAQ:ADBE) saw a decent share price growth in the teens level on the NasdaqGS over the last few months. … Since Adobe Systems’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. … With profit expected to more than double over the next couple of years, the future seems bright for Adobe Systems.Simply Wall St - – Full article
After Adobe Systems Incorporated's (NASDAQ:ADBE) earnings announcement in December 2017, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 42.96% next year relative to the past 5-year average growth rate of 9.95%. … I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of ADBE's earnings growth over these next few years. … NasdaqGS:ADBE Future Profit Jan 24th 18 By 2021, ADBE's earnings should reach $3,408.8M, from current levels of $1,694.0M, resulting in an annual growth rate of 17.47%.Simply Wall St - – Full article
Investors may find it useful to understand how market analysts view Adobe Systems's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. … Check out our latest analysis for Adobe Systems Market analysts' prospects for the upcoming year seems positive, with earnings climbing by a robust 32.87%. … This means, we can assume Adobe Systems will grow its earnings by 16.73% every year for the next couple of years.Simply Wall St - – Full article
Today I will run you through a basic sense check to gain perspective on how Adobe Systems is doing by comparing its latest earnings with its long-term trend as well as the performance of its software industry peers. … Check out our latest analysis for Adobe Systems Did ADBE beat its long-term earnings growth trend and its industry? … This shows that, on average, Adobe Systems has been able to gradually raise its bottom line over the last few years as well.Simply Wall St - – Full article
To help investors get a top level understanding, I will try to evaluate Adobe Systems's margin behaviour so investors can evaluate the revenue and cost drivers behind future earnings projections and understand how they may impact on returns compared to the industry. … Margin Calculation for ADBE Profit Margin = Net Income ÷ Revenue ∴ Profit Margin = 1.69 Billion ÷ 7.30 Billion = 23.20% Adobe Systems's margin has expanded in the past five years, due to average net income growth of 9.95% outstripping a 7.86% average growth in revenue, which means that the previous increase in revenue has coincided with a larger portion falling to the bottom line. … This suggests future earnings growth is driven further by enhanced cost efficiency alongside revenue increases, which is enlarging the incremental amount of net income that is retained from the forecasted revenue growth.Simply Wall St - – Full article
See our latest analysis for Adobe Systems What you must know about ROE Return on Equity (ROE) is a measure of Adobe Systems’s profit relative to its shareholders’ equity. … Given a positive discrepancy of 11.41% between return and cost, this indicates that Adobe Systems pays less for its capital than what it generates in return, which is a sign of capital efficiency. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity NasdaqGS:ADBE Last Perf Dec 14th 17 Essentially, profit margin shows how much money the company makes after paying for all its expenses.Simply Wall St - – Full article
NasdaqGS:ADBE Historical Debt Dec 12th 17 A simple way to determine whether the company has put debt into good use is to look at its operating cash flow against its debt obligation. … In the case of ADBE, operating cash flow over the past twelve months do cover its current debt,which indicates extremely low risk of ADBE not being able to meet its debt near-team, given that it generates enough cash in a year to pay off its current debt.This reflects proper cash and debt management by the company - great news for both debtholders and shareholders. … Furthermore, it is able to generate sufficient cash flow coverage, meaning it is able to put its debt in good use.Simply Wall St - – Full article
This indicates a relatively solid earnings per share growth rate of 92.66% over the next few years, which is an optimistic outlook in the near term. … ADBE’s earnings growth the past couple of years was 33.65% which indicates that the company's past performance is supportive of a strong continuation. … This means ADBE has already proven its capacity to grow at an elevated rate, which should give investors higher conviction of analysts' consensus prediction for the company's future growth going forward.Next Steps: For ADBE, I've compiled three key factors you should look at: 1.Simply Wall St - – Full article
Adobe Systems Incorporated operates as a diversified software company worldwide. Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content. This segment’s flagship product is Creative Cloud, a subscription service that allows customers to download and install the latest versions of its creative products. This segment serves traditional content creators, Web application developers, and digital media professionals, as well as their management in marketing departments and agencies, companies, and publishers. The company’s Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured, and optimized. This segment provides analytics, social marketing, targeting, advertising and media optimization, digital experience management, cross-channel campaign management, and audience management solutions, as well as video delivery and monetization to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers. Its Print and Publishing segment offers products and services, such as eLearning solutions, technical document publishing, Web application development, and high-end printing, as well as publishing needs of technical and business, and original equipment manufacturers (OEMs) printing businesses. The company markets and licenses its products and services directly to enterprise customers through its sales force, as well as to end-users through app stores and through its Website at adobe.com. It also distributes products and services through a network of distributors, value-added resellers, systems integrators, independent software vendors, retailers, and OEMs. The company was founded in 1982 and is headquartered in San Jose, California.
|Name:||Adobe Systems Incorporated|
Adobe Systems Incorporated
345 Park Avenue,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NasdaqGS||ADBE||Common Stock||Nasdaq Global Select||US||USD||13. Aug 1986|
|DB||ADB||Common Stock||Deutsche Boerse AG||DE||EUR||13. Aug 1986|
|SWX||ADBE||Common Stock||SIX Swiss Exchange||CH||CHF||13. Aug 1986|
|WBAG||ADBE||Common Stock||Wiener Boerse AG||AT||EUR||13. Aug 1986|
|BMV||ADBE *||Common Stock||Bolsa Mexicana de Valores||MX||MXN||13. Aug 1986|
|Company Analysis updated:||2018/02/22|
|Last estimates confirmation:||2018/02/16|
|Last earnings update:||2017/12/01|
|Last annual earnings update:||2017/12/01|
All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.