Hi there! Today I am going to analyze Adobe ($ADBE), a company that I have at an average price of $265 and that is now trading at $235.5 (-11.14%). Business moat: Adobe is the leader in creative software. It built a whole industry around the PDF standard and many of its products are used every day to generate images and videos. The company made a successful transition from perpetual licenses to SaaS subscriptions in 2014, showing the dominant position it had. Of course, recently there is a lot of fear due to AI disruption, so let’s see what we can get from the numbers. Financials (Sources: Finviz, GuruFocus and StockAnalysis): Annualized revenue growth: - 5 years: 13.06% - 3 years: 10.89% - 1 year: 12.03% - Guidance 2026: 11.8 - 12% ($26.576 billion to $26.626 billion), source: Adobe Q3 2026 Results, September 10, 2026. Annualized FCF/share growth: - 5 years: 13.10% - 3 years: 13.70% - 1 year (TTM): 17.67% (without considering share repurchases → FCF growth: 10.35%) P/FCF = 8.65 (FCF yield = 11.56%) SBC is 19.55% of FCF. Adjusted FCF yield after SBC: 9.30% We can see that Adobe is growing, for now, at the same pace as in previous years, so in terms of growth I see little impact from AI. In addition, the FCF yield after SBC is quite interesting. In terms of profitability ratios, we can see that gross margin and operating margin are quite stable, while ROIC has improved in recent years... ...Read the full article for free here. You can also subscribe for free to have new articles delivered straight to your inbox. https://theethicalridgetribe.substack.com/p/adobe-adbe-investment-thesis Disclaimer: For educational and informational purposes only. Nothing here constitutes investment advice. The author holds a long position in the security mentioned. Do your own due diligence.
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