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Adobe stock analysis. Ticker: $ADBE

Adobe reported earnings last week and the stock tumbled 14%. At the latest share price the company has a market cap of 232 billion dollars. With 6.8 billion of cash and investments and 3.6 billion of long term debt, the enterprise value is 228 billion.

Revenue over the last 12 months comes to 20 billion with 4.8 billion of net income and 7 billion of free cash flow. So Adobe stock is now trading at around 48 times earnings and 33 times free cash flow.

Despite falling 14%, this wasn’t a bad report from Adobe. Revenue increased 11% and adjusted operating income grew 16%. Gross margins increased to 88.6%, among the very best in the world. And Adobe announced a plan to buy back $25 billion dollars worth of stock. That figure is enough to buy back almost 10% of the company at current prices.

So why did the stock fall?

The obvious answer is that Adobe’s second quarter outlook came in below expectations. The company thinks revenue will grow 9.5% year-over-year with adjusted earnings growth of 12%. And one percent of that should come from stock repurchases.

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