ADBE: Adobe’s Sitting in the Suite Spot
Posted on Monday, March 24th, 2008 | In Stocks to WatchAdobe has also generated nearly $1.5 billion in free cash flow over the last 12 months, which gives it a free-cash-flow-to-enterprise-value-yield of more than 9%. That is nearly a 400% premium to the five-year Treasury yield.
Of course, the last six months have shown that attractive valuations can get you nowhere (or even put you in the hole). That is why the catalyst provided by the likely release of Creative Suite 4 becomes so important.
If Creative Suite 4 pans out like any of the last three product cycles, investors should start getting excited about it sometime between now and July. With consensus 2009 earnings estimates already at $2.07, a P/E expansion to 30 times gives a potential target of $62, up from a current $35.
If the thesis continues to play out, I’ll be able to stop kicking myself for jumping the gun.
Disclosure: William Trent owns shares of Adobe (ADBE)
Last 5 posts by William Trent
- Capacity Utilization - August 16th, 2009
- Corporate Profits - July 12th, 2009
- Capacity Utilization - April 18th, 2009
- Another Record: Capacity Utilization - April 2nd, 2009
- Record Territory - March 27th, 2009
 About William A. Trent (http://stockmarketbeat.com)
Stock Market Beat editor William A. Trent, CFA, has been an equity analyst since 1996 and is co-author of Understanding and Evaluating Prospectuses, Offering Documents, and Proxy Statements. His experience includes stints with institutional investors responsible for more than $70 billion in assets and covers all market-cap sizes. Sector concentrations have been within the TMT (Telecom, Media and Technology) and Transportation sectors. He is also the senior editor of Financial Education. He is available for freelance writing and consulting projects and can be contacted here. |
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