Big gains, but still pricey

Article Excerpt

ADOBE SYSTEMS INC. $259.78 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000;; Shares outstanding: 489.7 million; Market cap: $127.2 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. The company continues to benefit from strong demand for its subscription services, particularly for its Creative Cloud package of photo-editing and desktop-publishing programs. In the three months ended June 1, 2018, Adobe’s earnings jumped 62.7%, to $1.66 a share from $1.02 a year earlier. Sales rose 23.9%, to a record $2.20 billion from $1.77 billion. The company spends a high 17% of its revenue on research. That helps it compete in a rapidly changing industry. However, Adobe trades at a high 40.2 times the forecast 2018 earnings of $6.46 a share. That increases the chance of a sharp decline if sales slow. Adobe Systems is still a hold. hold…

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