This score-card analysis attributes an Overall Score to a company by analyzing several aspects that I consider to be among the most important.
In summary, a company to have an overall score close to 100% must have the following characteristics:
- Report high growth rates in the last 3 years (and in the last quarter) in terms of Revenue, Gross Profit, Operating Income and Net Income. Furthermore, it must operate with high and improving margins in recent years.
- Analysts expect Earnings Per Share (EPS) and revenues to grow in the short term (in the next quarter) and in the medium to long term (in the next 5 years). Moreover, they expect the company to be undervalued at current prices and in the last quarter their EPS expectations must have been beaten with a consequent rise in share prices.
- The stock price of the company must have outperformed the S&P 500 index and in the last 3 months the Hedge Funds and Insiders bought shares in the company.
The overall score ranges from 0% (if the characteristics listed above are all very negative) to +100% and it is unlikely that there will be a company with a +100% score because the requirements for achieving this score are very high, however a score higher than +70% can be considered good.
This analysis alone is not enough to decide whether or not to invest in a company because it does not provide indications on the timing of entry, but it is a good starting point.
Adobe Inc (ADBE)
- Overall Score: +72,2%
- Positive sides:
- ADBE has had excellent growth over the past 3 years. Revenue more than doubled to $ 10.6 billion. Net Income grew by 342% to $ 2.7 billion.
- Excellent growth even in the last quarter. Revenue + 23.7% and Net Income + 14.8%.
- Analysts expect a growth of 23.5% of EPS in the next quarter and an annual growth of 19.3% in the next 5 years
- Furthermore, they consider ADBE undervalued by 7.8% at current prices
- Negative sides:
- Despite the growth in the last quarter, quarterly margins worsened compared to 12 months earlier. Operating margin -3.9% and Net margin -7.2%.
- In the last 6 months ADBE has slightly underperformed the S&P 500 index, but if we consider the performance from the beginning of 2019 ADBE is outperforming it.
- In the last quarter the Insiders sold shares for 2.6 million dollars, while the Hedge Funds reduced their positions by 3 million shares.
Adobe Inc. is an American multinational computer software company headquartered in San Jose, California. It has historically focused upon the creation of multimedia and creativity software products, with a more recent foray towards digital marketing software.
The overall score of ADBE is 72,2% .
In the last 6 months, ADBE has underperformed the S&P500 index by -1,1% and analysts believe the company is undervalued by 7,8% .
In the last quarter, the company reported revenue of 2834,1 million, up by 23,7% compared to the same quarter 12 months earlier. Revenue TTM (Trailing-12-Months) are equal to 10643,9 million, up by 122,0% in the last 3 years.
ADBE reported an operating income of 853,8 million in the last quarter, an improvement of 18,8% compared to the same quarter 12 months earlier, also reporting a reduction by -3,9% in the operating margin. Considering the sum of the last four quarters (TTM), ADBE reports an operating income of 3018,6 Million , a growth of 234,2% compared to three years ago and an improvement of 50,6% in the operating margin.
ADBE reported a net income of 792,8 million in the last quarter, an improvement of 14,8% compared to the same quarter 12 months earlier, also reporting an improvement of -7,2% in the net margin. The TTM net income is 2783,8 million , a growth of 342,2% compared to three years ago and the net margin has improved by 99,2% .
In the next quarter, analysts expect growth in EPS (Earnings Per Share) of 23,5% and a growth in revenue of 20,6% . Furthermore, they expect an annual growth of ADBE EPS by 19,3% for the next 5 years.
In the last quarter, ADBE reported better EPS than analysts’ expectations and the stock price reacted by decreasing by -1,8% .
Finally, in the last 3 months the Hedge Funds have decreased their positions by 3M shares. The Insiders have sold shares worth $2.6M .
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This analysis considers numerical data to understand whether a company is good or not based on business growth and whether analysts are positive about it.
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Sources & additional info
*The comparison with the S&P 500 index is visible inside the graph.
*Data updated to the last quarterly report available
*Data in Millions of Dollars
*Data from zacks.com, tipranks.com, reuters.com, finance.yahoo.com
*Company information from wikipedia.com
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DISCLAIMER: The information in this blog post represents my own analysis/opinions and does not contain a recommendation for any particular security or investment.