Competitor Analysis: Evaluating Adobe And Competitors In Software Industry

Adobe Systems Incorporated -0.61%

Adobe Systems Incorporated

ADBE

459.87

-0.61%

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Adobe (NASDAQ:ADBE) in relation to its major competitors in the Software industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.

Adobe Background

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).

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Adobe Inc 48.20 14.63 11.59 3.88% $1.21 $4.59 2.65%
Salesforce Inc 71.76 4.90 8.51 2.46% $2.75 $7.14 10.77%
SAP SE 59.04 4.92 6.88 3.05% $2.32 $6.2 5.02%
Intuit Inc 66.27 10.74 12.19 2.08% $0.6 $2.53 11.34%
Synopsys Inc 63.28 13.11 14.52 7.01% $0.53 $1.32 21.15%
Cadence Design Systems Inc 81.50 24.93 20.76 9.94% $0.41 $0.96 18.75%
Workday Inc 52.52 8.94 10 16.16% $0.24 $1.46 16.75%
Roper Technologies Inc 43.91 3.43 9.72 2.26% $0.72 $1.13 12.76%
Autodesk Inc 62.28 30.09 10.25 16.9% $0.35 $1.34 3.89%
Palantir Technologies Inc 272.33 15.60 25.31 2.8% $0.11 $0.5 19.61%
Datadog Inc 882.21 20.24 20.33 2.82% $0.07 $0.48 25.62%
MicroStrategy Inc 72.63 15.04 64.06 5.93% $-0.04 $0.1 -6.09%
Ansys Inc 60.70 5.62 13.39 5.29% $0.37 $0.74 15.99%
AppLovin Corp 70.28 18.17 7.61 14.58% $0.37 $0.68 35.73%
PTC Inc 95.79 8.08 10.41 2.42% $0.16 $0.44 18.09%
Zoom Video Communications Inc 32.18 2.55 4.54 3.87% $0.2 $0.87 2.56%
Tyler Technologies Inc 108.40 6.05 9.22 1.34% $0.09 $0.21 6.35%
NICE Ltd 50.02 4.84 7.12 2.49% $0.16 $0.42 3.63%
Manhattan Associates Inc 88.56 55.25 16.84 19.96% $0.06 $0.13 20.27%
Bentley Systems Inc 51.58 17.36 13.96 22.81% $0.05 $0.24 8.26%
Dynatrace Inc 69.61 7.11 10.01 2.3% $0.05 $0.3 22.74%
Average 117.74 13.85 14.78 7.32% $0.48 $1.36 13.66%

After examining Adobe, the following trends can be inferred:

  • The Price to Earnings ratio of 48.2 is 0.41x lower than the industry average, indicating potential undervaluation for the stock.

  • With a Price to Book ratio of 14.63, which is 1.06x the industry average, Adobe might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.

  • Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 11.59, which is 0.78x the industry average.

  • The company has a lower Return on Equity (ROE) of 3.88%, which is 3.44% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

  • The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.21 Billion, which is 2.52x above the industry average, indicating stronger profitability and robust cash flow generation.

  • The company has higher gross profit of $4.59 Billion, which indicates 3.37x above the industry average, indicating stronger profitability and higher earnings from its core operations.

  • The company's revenue growth of 2.65% is significantly below the industry average of 13.66%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

By analyzing Adobe in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

  • In terms of the debt-to-equity ratio, Adobe has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.

  • This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.26.

Key Takeaways

For Adobe in the Software industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is high, suggesting investors are willing to pay a premium for its assets. The PS ratio is low, signaling a possible discount relative to revenue. In terms of ROE, Adobe lags behind peers, while EBITDA and gross profit margins are high, reflecting strong operational performance. However, revenue growth is lower compared to industry peers, potentially impacting future earnings.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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