Is Adobe Inc. (ADBE) overvalued?
On Equity Rank's model estimate, ADBE trades 12% below its fair value. Adobe Inc. (ADBE) last closed at $239.30; the multi-method model fair value is $273.25.
| Price | Model fair value | Price vs model |
|---|---|---|
| $239.30 | $273.25 | 12% below |
What the answer rests on
- 5 of 11 valuation methods put ADBE's value above its price and 6 put it below, so the methods disagree.
- To justify today's price, ADBE's free cash flow would need to grow about -0.8% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 10.0% a year.
- ADBE trades at 13.9 times its last year's earnings, against a median of 31.4 for 87 profitable Software companies.
- Over the past year the price sat below the model fair value on 94% of trading days. The gap ranged from 49% below to 4% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind ADBE's fair value · What prices assume · Other companies