US tech stock star Adobe reported double-digit fourth quarter (Q4) growth that shot beyond analyst forecasts on revenue and earnings overnight.
The developer of Photoshop and the Acrobat PDF reader posted a 14% jump in 4Q revenues to $3.42 billion year-on-year and exceeded analyst expectations of $3.36 billion.
Adjusted earnings per share (EPS) jumped 22.7% to $2.81 per share, passing the consensus mark of $2.67.
RAMPANT ANNUAL GROWTH
Revenue for the full year to 27 November 2020 rose 15% to $12.87 billion, while net income jumped 78% to $5.26 billion thanks to near 41% net profit margins.
Cash flows from operations were a record $1.78 billion.
Riding shotgun with a bullish outlook for fiscal 2021, the stock’s near-1.5% fall to $476.87 seems a clear sign that investor growth hopes have hit a ceiling, for now at least.
PRICE IS RIGHT FOR NOW
Having rallied 43% in 2020 so far, at this price the stock is trading on a 2021 price to earnings multiple of 42.6, or EV/EBITDA (enterprise value to earnings before interest, tax, depreciation and amortisation) of round 30, about twice the enterprise software industry average on both measures, according to Refinitiv data.
In its statement, Adobe said that it anticipates Q1 revenues and adjusted EPS of $3.75 billion and $2.78 per share, respectively.
The consensus estimates had been pitched at $3.51 billion and $2.60. For the 2021 full year the company projected revenue of $15.15 billion and adjusted EPS of $11.2.
Hitting these annual 2021 targets would mean revenue growth of 18% but just 3% in EPS as it juggles past acquisition costs and continues to invest in the future but would still fly beyond consensus estimates. These are currently pegged at $14.78 billion revenue and EPS of $11.11.
