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)||$3,603.54||$4,275.60||$5,429.18||$7,013.00||$8,377.00|
|Source||Analyst x18||Analyst x18||Analyst x4||Analyst x1||Analyst x1|
Discounted (@ 9.48%)
Present value of next 5 years cash flows:
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $8,377 × (1 + 2.47%) ÷ (9.48% – 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 +
$99,060 = $21,204 + $77,856
Value = Total value / Shares Outstanding ($99,060 / 492)Discount to Share Price
Value per share (USD): $201.15
Current discount (share price of $243.56): -21.09%
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 = 9.48% = 2.47% + (0.931 * 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 ($119,946,074,792).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.931 = 0.917 (1 + (1- 2.7%) (1.57%))
Levered Beta used in calculation = 0.931
Mr. Shantanu Narayen has been Chairman of Adobe Systems Incorporated since February 1, 2017 and has been its Chief Executive Officer since December 01, 2007 and has been President since January 2005. Mr. Narayen has been Chief Executive Officer of Adobe Systems Software Ireland Limited since 2007 and serves as its President. He serves as Senior Advisor of KKR & Co. L.P. He served as the Chief Operating Officer of Adobe Systems Inc. from January 2005 to December 2007 and served as its Executive Vice President of Worldwide Product Marketing & Development from March 2001 to January 2005. He held key product research and development positions within Adobe, including Senior Vice President of worldwide product development and Vice President and General Manager of the engineering technology group. Before joining Adobe in 1998, Mr. Narayen co-founded Pictra, Inc. He served as director of desktop and collaboration products at Silicon Graphics, Inc. and served various senior management positions at Apple Computer, Inc. He has been Director of Adobe Systems Incorporated since December 01, 2007 and Pfizer Inc. since September 27, 2013. He has been Lead Independent Director of Pfizer Inc., since 2018. He serves as a Director of Adobe Systems Software Ireland Limited and Stario.com. He served as Director of Metavante Technologies, Inc. since November 14, 2007 and Dell Inc. from September 2009 to October 29, 2013. Mr. Narayen is a member of the U.S. President's Management Advisory Board, established in 2010 to provide advice on how to implement best business practices, including the application of technology, on matters related to federal government management and operation. He serves on the Advisory Board of the Haas School of Business, University of California at Berkeley and is President of the board of the Adobe Foundation, which funds philanthropic initiatives around the world. He holds five patents and is a frequent speaker at industry and academic events. Mr. Narayen is Vice Chairman of US-India Strategic Partnership Forum. Mr. Narayen holds Bachelor's Degree, B.S. in Electronics Engineering from Osmania University in India, a Master's degree, M.S. in Computer Science from Bowling Green State University and a Master's Degree, M.B.A. in Business Administration from the Haas School of Business, University of California, Berkeley.
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:
5-year cash flow estimate 2018 2019 2020 2021 2022 Levered FCF ($, Millions) $3,603.54 $4,275.60 $5,429.18 $7,013.00 $8,377.00 Source Analyst x18 Analyst x18 Analyst x4 Analyst x1 Analyst x1 Present Value Discounted @ 9.48% $3,291.62 $3,567.44 $4,137.84 $4,882.28 $5,327.05 Present Value of 5-year Cash Flow (PVCF)= $21,206 The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = $8,377 × (1 + 2.5%) ÷ (9.5% – 2.5%) = $122,516 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = $122,516 / ( 1 + 9.5%)5 = $77,910 The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is $99,116. … NasdaqGS:ADBE Intrinsic Value May 23rd 18 Important assumptions Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows.Simply Wall St - – Full article
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. … Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. … If you are no longer interested in Adobe Systems, you can use our free platform to see my list of over 50 other stocks with a high growth potential.Simply Wall St - – Full article
Investors with a long-term horizong may find it valuable to assess Adobe Systems Incorporated's (NASDAQ:ADBE) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. … View our latest analysis for Adobe Systems How Did ADBE's Recent Performance Stack Up Against Its Past? … Given that these values are fairly nearsighted, I’ve determined an annualized five-year value for ADBE's earnings, which stands at US$805.67M This means that, generally, Adobe Systems has been able to gradually grow its earnings over the last couple of years as well.Simply Wall St - – Full article
To help investors get a top level understanding, this article will interpret Adobe Systems's margin performance to assist in analysing the revenue and cost anatomy behind the earnings expectations for the future and the impact it has on shareholder returns relative to the wider industry. … Margin Calculation for ADBE Profit Margin = Net Income ÷ Revenue ∴ Profit Margin = 1.88 Billion ÷ 7.70 Billion = 24.40% The past five years have seen Adobe Systems's margin expand, as a result of average net income growth of 14.02% exceeding a 8.90% average growth in revenue, indicating that that the previous revenue growth has been acompanied by a growing portion translated in to earnings. … Thus, it is essential to run your own analysis on Adobe Systems's future earnings whilst keeping a watchful eye over their ability to maintain cost efficiency and top line growth as these are the factors driving future earnings growth according to our preliminary margin analysis.Simply Wall St - – Full article
Additionally, ADBE has produced cash from operations of US$2.91B during the same period of time, leading to an operating cash to total debt ratio of 154.73%, signalling that ADBE’s operating cash is sufficient to cover its debt. … Looking at ADBE’s most recent US$3.53B liabilities, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 2.05x. … We can check to see whether ADBE is able to meet its debt obligations by looking at the net interest coverage ratio.Simply Wall St - – Full article
View our latest analysis for Adobe Systems Breaking down Return on Equity Return on Equity (ROE) is a measure of Adobe Systems’s profit relative to its shareholders’ equity. … Adobe Systems’s cost of equity is 9.46%. … 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 Mar 15th 18 Basically, profit margin measures how much of revenue trickles down into earnings which illustrates how efficient the business is with its cost management.Simply Wall St - – Full article
Formula Price-Earnings Ratio = Price per share ÷ Earnings per share P/E Calculation for ADBE Price per share = $216.4 Earnings per share = $3.432 ∴ Price-Earnings Ratio = $216.4 ÷ $3.432 = 63.1x The P/E ratio isn’t a metric you view in isolation and only becomes useful when you compare it against other similar companies. … Since ADBE's P/E of 63.1x is higher than its industry peers (34.3x), it means that investors are paying more than they should for each dollar of ADBE's earnings. … For example, if you inadvertently compared riskier firms with ADBE, then investors would naturally value ADBE at a higher price since it is a less risky investment.Simply Wall St - – Full article
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
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. Its 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, media optimization, digital experience management, cross-channel campaign management, audience management, and video delivery and monetization solutions 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 e-learning 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|
|Area||Date (UTC time)|
|Company Analysis updated:||2018/05/27 09:07|
|End of day share price update:||2018/05/25 00:00|
|Last estimates confirmation:||2018/05/25|
|Last earnings update:||2018/03/02|
|Last annual earnings update:||2017/12/01|
All dates and times 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.