Cre­ative Earn­ings

The Saratogian (Saratoga, NY) - - BUSINESS -

Cre­ative soft­ware spe­cial­ist Adobe (Nas­daq: ADBE) has seen its stock quadru­ple in value over the past five years, with the com­pany ben­e­fit­ing from many of the tail­winds driv­ing the econ­omy. The rise of soft­ware as a ser­vice, the gig econ­omy, and in­creased use of dig­i­tal de­sign, dig­i­tal me­dia and dig­i­tal mar­ket­ing are all rea­sons that the to­tal ad­dress­able mar­ket is es­sen­tially un­lim­ited for its prod­ucts, which in­clude Pho­to­shop, Il­lus­tra­tor and Light­room.

Adobe caters to the largest cor­po­ra­tions, cre­ative col­lege stu­dents and ev­ery­one in be­tween. It’s in­cred­i­bly ef­fi­cient as well, with op­er­at­ing mar­gin at 28% and its rel­a­tively low debt of $4.1 bil­lion al­most en­tirely off­set by over $3.6 bil­lion in liq­uid as­sets. In the com­pany’s re­cent third quar­ter, it re­ported record rev­enue of $2.83 bil­lion, up 24% year over year, with net in­come ris­ing 19%.

Seven years ago, CEO Shan­tanu Narayen repack­aged Adobe’s prod­ucts into an all-en­com­pass­ing suite called Adobe Cre­ative Cloud, now the in­dus­try stan­dard for graphic de­sign. Mil­lions of sub­scribers pay $80 a month or $360 per year, and Adobe es­ti­mates that by 2022, its ad­dress­able mar­ket could rise to 45 mil­lion po­ten­tial users.

Adobe shares may not be a scream­ing bar­gain to­day, but they still stand a good chance of re­ward­ing long-term in­vestors. At least keep them on your radar in case they drop in value. (The Mot­ley Fool has rec­om­mended Adobe.)

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