Adobe Inc. (ADBE) — Quantitative Forecast & Factor Scores
ADBE screens as high-quality and attractively valued — DCF model implies a +61% margin of safety at current levels.
ADBE's quantitative grade is Strong Buy, with elevated downside risk (CVaR -21.2%), and quality metrics (net margin 29%, ROE 59%). Adobe Inc. (ADBE) trades at $234.84 with a valuation grade of Strong Buy: a trailing P/E of 13.7x at a 57% discount to sector median, net margins of 29.5%, a DCF-implied intrinsic range of $236–$521 suggesting a +61% margin of safety, beta 1.53 (highly aggressive risk profile).
Key Takeaways
- Valuation: Strong Buy grade — P/E 13.7x — DCF range $236–$521 implies +61% margin of safety
- Risk: CVaR -21.2% (95th percentile, 1-month) indicates moderate tail exposure; beta of 1.53 amplifies broad market moves in both directions
- Strengths: Quality 5.0/5, Size 4.0/5, 29% net margin, 59% ROE dominate the factor profile
- Watch: Monitor earnings delivery — premium multiples leave limited margin for misses
Quantitative Factor Profile
Key Metrics
| Metric | Value |
|---|---|
| Current Price | $234.84 |
| P/E Ratio (TTM) | 13.7x |
| Forward P/E | 8.9x |
| P/S Ratio | 3.9 |
| EV/EBITDA | 10.0 |
| Beta | 1.53 |
| Net Margin | 29.5% |
| ROE | 58.8% |
| Debt/Equity | 58.3% |
| CVaR (95%, 1M) | -21.2% |
| Market Cap | $95.7B |
Earnings History
| Quarter | EPS Est. | EPS Actual | Surprise |
|---|---|---|---|
| Q1 2026 | $5.87 | $6.06 | +3.2% ✓ |
| Q4 2025 | $5.40 | $5.50 | +1.9% ✓ |
| Q3 2025 | $5.18 | $5.31 | +2.5% ✓ |
| Q2 2025 | $4.97 | $5.06 | +1.7% ✓ |
ADBE vs. Sector Peers
| Ticker | P/E (TTM) | Beta | CVaR-95 | Net Margin |
|---|---|---|---|---|
| ADBE | 13.7x | 1.53 | -21.2% | 29.5% |
| MSFT | 22.3x | 1.11 | -17.0% | 39.0% |
| GOOGL | 25.4x | 1.11 | -10.4% | 32.8% |
| META | 22.4x | 1.28 | -19.2% | 30.1% |
| CRM | 23.0x | 1.31 | -27.9% | 18.0% |
ADBE screens as an exceptional-quality business, at an attractive entry point relative to intrinsic value. The four-quarter earnings beat streak is constructive, with improving surprise magnitude (+3.2% most recently).
ADBE trades at 13.7x trailing earnings — 57% below the Technology sector median of 32.0x. The DCF model implies a +61% margin of safety — the risk/reward is currently skewed to the upside.
The model points to a strong buy and the DCF math backs it — there is real margin of safety here, which is rare at this stage of the cycle. The DCF gap is striking — the model sees 61% upside, and market consensus is not pricing it. I watch for the catalyst that closes that gap: an earnings beat that resets forward estimates, a sector re-rating, or a margin inflection. Without a visible catalyst, valuation gaps can stay wide longer than logic suggests they should. The setup that would make me more positive is a quarter that confirms the operating leverage story. The setup that would make me cautious is any signal that consensus estimates are getting ahead of fundamentals.
Is ADBE a buy, hold, or sell?
ADBE carries a valuation grade of Strong Buy. At a trailing P/E of 13.7, the stock trades at a 57% discount to the Technology sector median of 32.0x. Our discounted cash flow model produces an intrinsic range of $236–$521 — implying a +61% margin of safety at the current price of $234.84. The width of the DCF range reflects genuine uncertainty in the terminal growth rate assumption: the correct framework is a probability-weighted distribution over scenarios, not a single point estimate.
ADBE has beaten consensus estimates in 100% of recent quarters, signalling strong execution consistency. The most recent quarter delivered a 3.2% earnings surprise. Analyst estimate revisions are trending upward.
What are ADBE's key risk factors?
With a beta of 1.53, ADBE exhibits a highly aggressive risk profile relative to the broad market. The 95th-percentile CVaR of -21.2% on a one-month horizon should inform position sizing directly: at a 10% portfolio weight, this tail event contributes approximately 2.1% of total portfolio loss in the worst 5% of months. Net margins of 29.5% are significantly above the Technology sector average of 22%, reflecting durable pricing power. Return on equity of 58.8% indicates highly efficient capital allocation. The balance sheet is conservatively leveraged at 58% debt-to-equity.
At 0.71, the put/call ratio skews bullish, with call buyers dominating recent flow. Implied and realized volatility are roughly aligned at 43.6% and 40.5% respectively. Insiders have been net sellers to the tune of $40.8M recently. While routine dispositions are common, the magnitude bears watching. Short interest is low at 3.6% of float, suggesting limited bearish conviction.
How does ADBE fit in a diversified portfolio?
At typical HENRY portfolio weights — 10–20% of the equity allocation — ADBE carries a beta of 1.53, meaning it amplifies broad market moves proportionally. The appropriate weight is not a function of conviction alone, but of the full covariance structure across all holdings. See the Ledoit-Wolf covariance framework for the methodology behind these calculations.
As a Technology constituent, ADBE's risk profile should be evaluated alongside sector peers when constructing diversified portfolios.
True portfolio risk is a function of the full covariance structure across all holdings — not individual stock metrics. The Portfolio Health Check quantifies this at the portfolio level: it surfaces hidden concentration, marginal CVaR contributions, and the degree to which your overall allocation deviates from an optimal risk-adjusted mandate. The ADBE analysis here is a single node in that larger structure.
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Launch Live Analysis →This analysis is produced using a systematic quantitative framework applied to market data and does not constitute investment advice. Prose commentary is AI-assisted and generated from structured quantitative inputs. All data and metrics are as of 2026-03-28 and are point-in-time estimates subject to revision without notice. CVaR figures are based on historical simulation and do not guarantee future outcomes. DCF ranges and upgrade/downgrade triggers are forward-looking statements based on current assumptions and may not materialise. Past performance does not guarantee future results. This analysis does not account for individual circumstances, tax position, or investment objectives — consult a qualified financial advisor before making investment decisions. This content is intended for informational purposes only and does not constitute regulated investment advice under MiFID II or FCA guidelines. This content is not intended for US persons or residents of jurisdictions where its distribution would be contrary to local law or regulation. This service is not directed at residents of Finland, Sweden, Norway, Denmark, Iceland, or Poland. The author may hold long or short positions in securities mentioned in this analysis. Nothing on this page represents a solicitation to buy or sell any security. A.L. Capital Advisory is an independent private advisory practice and is not affiliated with Adobe Inc.