For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Adobe Systems (ADBE) ten years ago? It may not have been easy to hold on to ADBE for all that time, but if you did, how much would your investment be worth today?
Adobe Systems' Business In-Depth
With that in mind, let's take a look at Adobe Systems' main business drivers.
San Jose California-based Adobe Inc. is one of the largest software companies in the world. Adobe picks up licensing fees from customers, which form the bulk of its revenue.
The company also offers technical support and education, which account for the balance. The company operates through three segments.
The Digital Media solutions segment enables small businesses and enterprises to create highly compelling content, deliver it across diverse media through smartphones, tablets, e-readers, and other devices, and then optimize it through systematic targeting and measurement.
Within Digital Media, the two major components of revenue are the Creative family of products and Document Services products. The target customers are traditional content creators, web application developers, digital media professionals and user interface designers/developers, writers, videographers and photographers.
The Digital Experience segment provides insights into the performance of digital marketing initiatives, empowers organizations to make informed decisions, and tries to ensure the success of online marketing programs. The target customers are digital marketers, advertisers, publishers, merchandisers, web analysts, chief marketing officers and chief revenue officers.
The Publishing segment supports technical and business publishing through a special printing and imaging page description language and a PDF-based workflow regulation platform. The target customers are professional graphics and content publishers, as well as OEMs offering workflow software, printers and other output devices.
In fiscal 2020, the company generated $12.87 billion in revenue, which was derived from 3 segments—Digital Media solutions (72% of 2020 revenues), Digital Marketing solutions (24%) and Print and Publishing contributed the remaining 4%.
The company has offices in several countries which include the likes of Australia, Austria, Belgium, Brazil, Canada, Chile, China, Columbia, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, India, Ireland, Israel, Italy, Japan and Mexico, to name a few.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Adobe Systems ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in April 2011 would be worth $14,310.03, or a gain of 1,331%, as of April 8, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 205.96% and gold's return of 13.30% over the same time frame.
Analysts are forecasting more upside for ADBE too.
Adobe reported strong fiscal first-quarter results wherein both earnings and revenues topped estimates. The company benefited from strong demand for its creative products. The company’s Creative Cloud, Document Cloud and Adobe Experience Cloud products drove the top-line growth. Rising subscription revenues and solid momentum across the mobile apps remained major positives. Growth in emerging markets, robust online video creation demand and improving average revenue per user are tailwinds. We remain optimistic about Adobe’s market position, compelling product lines, continued innovation, solid adoption of Creative Cloud and Adobe marketing cloud. The stock has outperformed the industry over a year. However, lower end-market demand and exposure to Europe remain overhangs. High acquisition expenses are risks to its margin expansion.
Over the past four weeks, shares have rallied 11.88%, and there have been 11 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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