The software industry has been one of the biggest beneficiaries of the COVID-19 pandemic, given the surge in demand for digital solutions by virtually every industry. The artificial intelligence (AI) market is also booming, given its broad applications in core industries. According to the International Data Corp. (IDC), AI spending is on track to increase 15.2% year-over-year in 2021. IDC analysts also expect growth to remain robust in the subsequent years.
Because COVID-19 cases are rising again, several countries are reintroducing social distancing and travel restrictions. Given this backdrop, remote working should continue for the next few months at least. Also, the ongoing digital transformation in almost every sector is expected to accelerate the software industry’s growth.
Therefore, we believe that fundamentally sound stocks Adobe Inc. (ADBE – Get Rating), Constellation Software Inc. (CNSWF – Get Rating), NICE Ltd. ADR (NICE – Get Rating), and PTC Inc. (PTC – Get Rating), which have overall A (Buy) ratings in our proprietary POWR Ratings system, could continue advancing.
ADBE is a well-known San Jose, Calif.-based software company that operates through three segments: Digital Media; Digital Experience, and Publishing. The company offers products and services for creating, managing, measuring, optimizing, and engaging with compelling content and experiences.
On April 27, ADBE announced the next generation of its Real-time Customer Data Platform (CDP), which is the only enterprise application architecture built from the ground up for first-party data-driven customer acquisition and engagement. The company expects to partner with brands to deliver relevant, responsive, and respectful experiences through first-party data.
ADBE’s revenue increased 22.6% year-over-year to $3.84 billion in its fiscal second quarter, ended June 4. Its gross profit stood at $3.39 billion, up 25% from the same period last year. And its operating profit grew 38.4% from its year-ago value to $1.41 billion. Its cash and cash equivalents balance rose 39.6% from the prior-year quarter to $4.25 billion over this period.
A $4.04 billion consensus revenue estimate for its fiscal third quarter (ending November 2021) indicates an 18.1% increase year-over-year. The Street expects the company’s EPS to rise 9.6% from the prior-year quarter to $3.08 in the next quarter. ADBE has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters.
ADBE gained 27.8% over the past six months to close yesterday’s trading session at $636.94. The stock has gained 41.6% over the past year.
ADBE’s strong fundamentals are reflected in its POWR Ratings. ADBE has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
ADBE has an A grade for Quality, and a B for Stability and Sentiment. Among the 145 stocks in the Software – Application industry, ADBE is ranked #20.
Click here to view additional ADBE ratings for Growth, Value, and Momentum.
CNSWF, together with its subsidiaries, acquires, builds, and manages vertical market software businesses in the United States, Canada, Italy, Germany, India, United Kingdom, Brazil, Switzerland, Austria, Israel, and internationally. The company is headquartered in Toronto, Canada.
On June 7, CNSWF announced the completion of an agreement with Fair Isaac Corporation (FICO), a leading predictive analytics and decision management software company, to purchase…
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