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)
Summary
- 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.
Full description
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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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.
