Adobe Inc · Company Review

Company Review: Adobe Inc.

Everything…and I mean everything…is going to the “cloud”. Companies are moving their large data center operations to cloud infrastructure…for good measure. Things are cheaper in the cloud. High capacity, highly available, scalable applications can be developed in the cloud, for the cloud, by the cloud. With that said, there’s definitely an opportunity to leverage the cloud in your business models as well. And honestly, I think Adobe has found it’s swing by pitching the benefits of  “the cloud” in a non-technical frame.

Whether you work in media, marketing, finance, or legal, you may come in contact with any of Adobe Inc.’s products. Just to name a few, you’ve got Photoshop, Adobe Stock, XD, and Acrobat Reader for PDF’s. Very popular tools especially in a world where content creation, social media, and the need for digital storage is on the rise. So here are some numbers:

Company Snapshot
Ticker Symbol: ADBE
Current Price: $238.99
52 Week Low: $165.68
52 Week High: $277.61
Dividend (Yield): N/A
EPS: 4.84
P/E Ratio: 49.37

The Good
The messaging that Adobe puts out there about their company and what they are trying to do is to improve the way people experience technology. So many companies are going through digital transformations and one of the ways to do that is to educate people about technology and make it more accessible to them. This company is really leveraging the benefits of technology for creative gain unlike any other company in this space. And the other part of this is I can’t put a finger on exactly who is in direct competition with Adobe. You have companies that compete in one facet or another but across the board, Adobe has a solid hold in the document signing, photo-editing, cloud content storage offering, and also providing an interesting use case for Artificial Intelligence. Take a look at their investor handout from earlier this month.

They just purchase Magneto and Marketo to their portfolio as well to bring in offering in the marketing and commerce space for the company. They predict that the inclusion of both of these companies will make Adobe something companies simply cannot do without and bring the Adobe Suite a tool in the critical path for more of the customers. This hopefully helps drive more revenue through support which is a tiny percent of the revenue generated in 2018.

The Bad and The (Not So) Ugly
They don’t pay a dividend and I think that may stem from the fact that their earnings growth lag behind revenue growth. But I can’t say this is terrible because they are in process of buying back stock, which increases the amount of treasury stock and naturally decreases the amount of Shareholders Equity reflected in their balance sheet. So instead of shares of the stock, people get reimbursed with cash in exchange for their ownership in the company. That’s one thing you can do with a ton of cash…or they can just start paying dividends again…but I’m not on the Board of Directors of that company…yet 😉

I really enjoyed reading through their online material provided to their Financial analysts. Partly because they use their own tools to make it look really nice and now I want an Adobe Subscription just to see how it can help me make graphics for this blog. But for now, I have a long position in ADBE. And since I don’t actually use it on a day to day basis, if you do or know someone who does and they don’t like it, send them my way. I’d like to hear their perspective.

Until next post folks…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s