Stock price when the opinion was issued
Still growing topline and bottom line at double digits. Spewing lots of free cash, buying back stock, great balance sheet. Worry is about how will AI affect its business? No evidence yet that it's impacting any of the company's results. Market's not respecting the fundamentals at the moment, maybe rightly so.
He bought more. They beat top and bottom lines, and raised guidance. He's a value investor. Sure, the share price has been terrible, but their earnings estimates are starting to rise and they're buying back share to reduce the share count 5% in the past year. They are meeting the competitive threat through their beats and guidance. They outperform consistently. Eventually, the share price will rise.
Still stands out, but the fear is that it won't in the world of AI. And that's why it looks particularly interesting. Good earnings, upped guidance, yet stock fell. Valuation has collapsed to 17x PE. Still likely to grow double-digit EPS this year, and consensus is still 14-15% EPS growth over the next 3 years.
There is more competition, but it's spending 18% of sales on R&D, so something compelling will turn up. No dividend.
Yesterday they reported and shares fell 8.5% today. Results were terrific, but guidance for the quarter was a tad light. There were many price hikes and hope heading into the quarter. The bulls got way ahead of themselves. He would pounce on this current weakness. The quarter was strong across every major business line with no areas of weakness. They beat top and bottom line. The key cloud metrics were strong; net new digital media annualized recurring revenue strongly beat. Q4 guidance wasn't "that" soft, but he would shake off fears, because of currency fluctuations and a few major deals closed early, intended to happen the next quarter. Also, they are spending more on marketing because they have new express software for teams, students and enterprise. More important is their guidance, which we'll have to wait until December. Adobe has done so well for so long and their AI products remain compelling and their complete AI suite is amazing (he uses them). Past post-earnings slumps have been great times to buy.