ADBE — Adobe Inc.
Snapshot dated September 29, 2026.
Adobe Inc. is a global software corporation that provides a comprehensive suite of digital tools primarily categorized into three cloud-based segments: Digital Media, Digital Experience, and Publishing and Advertising. Its Digital Media segment includes the flagship Creative Cloud suite, which offers essential industry applications such as Photoshop, Illustrator, and Premiere Pro, alongside the Document Cloud platform anchored by Adobe Acrobat and Adobe Sign. The Digital Experience segment delivers Adobe Experience Cloud, a collection of integrated solutions for marketing, analytics, and commerce that serves large-scale enterprise clients. The company operates globally with a workforce of over 29,000 employees and provides services to a diverse customer base ranging from individual creative professionals to Fortune 500 companies. Adobe holds a dominant position in the creative software industry, consistently competing against rivals such as Canva and various specialized SaaS providers. Recent strategic developments have focused heavily on integrating generative AI capabilities, specifically Adobe Firefly, across its entire product ecosystem to automate content creation workflows.
Fair Value / Share
$635.00
Price on September 29, 2026
$229.82
Upside to fair value
176.3%
Margin of safety 63.8%
Upside is measured against what you pay; margin of safety is measured against what the business is worth.
Data by Equibles and SEC filings. Figures are as of September 29, 2026 and are not live.
Earnings Yield
Earnings Yield shows how much profit a company generates relative to its share price. EPS ÷ Stock Price.
Stock Price
$229.82
Market Cap
$90,893,810,000
Net Income (TTM)
$7,284,000,000
Diluted Shares
395.5 million
EPS (TTM)
$18.42
Earnings Yield
8.01%
AI Analysis
With a stock price of $229.82 and earnings per share of $18.42, Adobe Inc. produces an earnings yield of 8.01%. This figure sits above the 4-5% return available from a safe alternative like a bond. This yield indicates that for every dollar of the current earnings price, the market is pricing in a specific expectation of future performance. If the earnings yield were to rise, it would imply that either the share price has declined or the annual earnings have increased. Conversely, a lower yield would indicate that the market has bid up the share price relative to current profit levels, requiring higher future growth to justify the cost. This measure does not account for debt levels, capital expenditure requirements, or the long-term stability of the company’s earnings stream.
Return on Capital
EBIT ÷ (Net Working Capital + Net Fixed Assets) — how efficiently the business turns capital into profit.
EBIT (TTM)
$9,271,000,000
Net Working Capital
-$5,492,000,000
Net Fixed Assets
$1,870,000,000
Invested Capital
-$3,622,000,000
Return on Capital
Capital-free operations
This business operates on negative invested capital — customers pay in advance, so the business funds itself rather than tying up capital. Combined with positive EBIT, that is the strongest possible outcome in this framework, not a missing result.
AI Analysis
Adobe generated $9.3B in EBIT, while utilizing -$5.5B in net working capital and $1.9B in net fixed assets, resulting in a total invested capital of -$3.6B. Because the invested capital figure is negative while the EBIT is positive, this represents the strongest outcome the framework can measure. It indicates the business does not require its own capital to function, as customer payments—frequently realized through deferred revenue—provide the necessary funding to cover operations. Consequently, a percentage return on capital is not applicable here because the ratio is mathematically undefined with a negative denominator. This measurement does not account for shifts in industry-specific capital intensity, and a change in the company's billing model—such as moving away from upfront customer payments—would increase the invested capital requirement, thereby altering this result.
Acquirer's Multiple
Enterprise Value ÷ Operating Earnings — how many years of operating earnings it would take to buy the whole business.
| Company | Operating earnings | Enterprise value | Multiple |
|---|---|---|---|
| ADBEAdobe Inc. | $9.3B | $91.3B | 9.8x |
| CRMSalesforce, Inc. | $8.7B | $217B | 24.8x |
| DOCUDocusign, Inc. | $402M | $12.4B | 30.7x |
Where ADBE sits: 9.8x against a peer median of 27.8x (peers: 24.8x and 30.7x) — 64.6% below the median.
Show the enterprise value bridge for each companyHide the enterprise value bridge
ADBE
Debt $4.8B. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $399M of operating lease liabilities as of 2026-08-28 ($310M non-current, $89M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
CRM
Named as a competitor: Competes directly against Adobe Experience Cloud in digital marketing, analytics, and customer experience software
Debt $39.3B. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $2.5B of operating lease liabilities as of 2026-07-31 ($1.9B non-current, $531M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
DOCU
Named as a competitor: Competes directly against Adobe Document Cloud in electronic signature and digital document workflows
Debt $0. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $183.1M of operating lease liabilities as of 2026-07-31 ($167.6M non-current, $15.5M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
Operating earnings — ADBE
AI Analysis
The Acquirer's Multiple divides Enterprise Value by operating earnings to represent the years of earnings required to pay for a company. Adobe (ADBE) has an Enterprise Value of $91.3B and operating earnings of $9.3B, resulting in a 9.8x multiple. Salesforce (CRM) has an Enterprise Value of $217B and operating earnings of $8.7B, yielding a 24.8x multiple. DocuSign (DOCU) has an Enterprise Value of $12.4B and operating earnings of $402M, resulting in a 30.7x multiple. ADBE holds the lowest multiple, while DOCU holds the highest. ADBE is 9.8x against a peer median of 27.8x (peers: 24.8x and 30.7x) — 64.6% below the median. The calculation depends on current debt and cash positions alongside recent operating results; the comparison would shift if companies altered their capital structures or if differences in business model efficiencies changed the underlying profitability.
FS-Score
A 10-check read on financial health, across profitability, balance-sheet stability and operating momentum.
FS-Score
9/10
This company scores high on profitability, stability, and momentum.
Section 1
Current Profitability
3/3
Profitability is Strong as the company passed all three checks, generating substantial positive returns and cash flow relative to its asset base.
- Return on Assets is positive at 24.17%
- Free Cash Flow to Total Assets is positive at 33.40%
- Accruals check passed with a 1.41 ratio of Cash Flow from Operations to Net Income
This score indicates that accounting earnings are fully supported by cash generation, a result that would only weaken if cash flow fell significantly below reported net income.
Return on Assets (ROA > 0)
PassFree Cash Flow to Total Assets (FCFTA > 0)
PassAccruals (CFO / Net Income > 1)
PassSection 2
Stability
2/3
Stability is Mixed, reflecting a reduction in share count and healthy adjusted liquidity despite an increase in the debt-to-assets measure.
- Long-Term Debt / Total Assets increased from 0.09 to 0.21
- Current Ratio is 1, but the point is awarded because current assets cover non-deferred obligations 3.1 times over
- Net Dilution passed as diluted shares fell from 449.7 million to 427.0 million shares
The score in this section is currently limited by the rise in leverage, which would need to stabilize or reverse to reach a perfect mark.
Change in Leverage (↓ or unchanged)
FailChange in Liquidity (↑ Current Ratio)
PassCustomers pay in advance here: 68% of what this company owes within the year is revenue it has already collected but not yet delivered, not money it has to pay out. A current ratio below 1 is how this business model works, not a warning sign — setting that revenue aside, current assets cover the remaining obligations 3.1 times over.
Net Dilution (annual diluted weighted-average shares, this year vs last)
PassSection 3
Recent Operational Improvements
4/4
Operational improvements are Strong, with the company showing year-over-year gains in every efficiency and margin metric tracked.
- Return on Assets improved from 18.39% to 24.17%
- Free Cash Flow to Total Assets rose from 26.04% to 33.40%
- Gross Margin increased from 89.04% to 89.27%
- Asset Turnover improved from 0.71 to 0.81
These results show a business becoming more efficient at extracting revenue and profit from its assets compared to the previous year.
Change in ROA (↑)
PassChange in FCFTA (↑)
PassChange in Gross Margin (↑)
PassChange in Asset Turnover (↑)
PassFramework conclusion
The company achieves a total FS-Score of 9/10, driven by strong profitability and across-the-board operational improvements. This high score suggests that the company's financial health is robust, indicating that any perceived cheapness in the stock is more likely a result of market mispricing than underlying business deterioration. The only deduction comes from an increase in the leverage ratio over the last twelve months.
- The 24.17% Return on Assets is an improvement over last year's 18.39%
- Cash Flow from Operations is 1.41 times larger than Net Income
- Asset Turnover increased from 0.71 to 0.81
- Diluted shares outstanding were reduced to 427.0 million shares
Intrinsic Value (DCF)
A 10-year discounted cash flow, then the bridge from business value to value per share.
Reported cash flow → unlevered free cash flow
Free Cash Flow (reported)
$10.6B
+ After-Tax Interest Expense
$204.1M
= Unlevered Free Cash Flow
$10.8B
Business value (10-year DCF)
PV of Years 1–10
$95.1B
PV of Terminal Value
$156.5B
= Business Value
$251.6B
Terminal value share
62.21%
Business value → share value
Intrinsic Value (business)
$251.6B
+ Cash & Equivalents
$4.4B
− Debt
$4.8B
= Shareholders' Value
$251.1B
÷ Diluted Shares
395.5 million
= Fair Value / Share
$635.00
Divided by 395.5 million diluted shares — the weighted-average diluted count from the most recent quarterly income statement, for the quarter ended 2026-08-28.
Risk bucket → discount rate
low (9%)
Year-1 FCF
$10.8B
Trailing twelve months.
FY2023 $6.9B · FY2024 $7.9B · FY2025 $9.9B
Growth rate (yrs 1–10)
8%
Terminal growth (after yr 10)
3%
AI Analysis
Adobe is categorized in the low risk bucket with a 9% discount rate due to its dominant market position and predictable, recurring subscription revenue. The 8.00% annual growth rate for the 10-year forecast reflects historical cash flow compounding driven by digital media expansion. The valuation uses a fixed Year-1 FCF of $10.8B. Additionally, the terminal growth rate is fixed at 3% for all companies in this framework, rather than being a specific judgment on this business. The fair value per share of $635.00 is calculated by taking the intrinsic value of the business, adding $4.4B of cash, subtracting $4.8B of debt, and dividing by 395.5 million shares. Compared to the current price of $229.82, the upside to fair value is 176.30%, and the margin of safety—the buffer within the estimate—is 63.8%. Notably, the terminal value accounts for 62.2% of the total business value. Because this is a high proportion, the valuation relies heavily on long-term assumptions. The estimate is most sensitive to the 10-year growth rate, as any adjustment to this figure significantly alters both the cumulative cash flows and the terminal value calculation.
Overall Verdict
How the five signals above stack up together, then the full synthesis.
Earnings Yield
8.01% vs ~4-5% bond-yield benchmark
Return on Capital
Capital-free operations — negative invested capital, positive EBIT
Acquirer's Multiple
9.8x against a peer median of 27.8x (peers: 24.8x and 30.7x) — 64.6% below the median.
FS-Score
9/10 — Financial rockstar
Intrinsic Value
176.3% upside to fair value
These five measures assess two distinct dimensions of the business: operational efficiency and pricing. Return on Capital and the FS-Score assess operational quality, with the former reflecting a unique capital-free structure and the latter indicating strong balance sheet health with a 9/10 result. Simultaneously, the Earnings Yield of 8.01%, the Acquirer's Multiple of 9.8x, and the 176.3% upside to fair value evaluate the current price against the firm's earnings power and estimated worth. While the company exhibits a 63.8% margin of safety, these metrics collectively suggest that the price currently rests well below the calculated fair value. There is no tension between the operational and valuation metrics here, as both categories register in favorable territory. Should the Earnings Yield compress toward the bond-yield benchmark, the overall picture would shift most significantly, as that metric provides the most immediate signal regarding the price investors are paying for the company's operating earnings.
Comments
Notes from readers on ADBE — one each. Comments stay with the company, so they carry across to a later snapshot, and each one shows the date it was written.
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