Adobe Systems Third Quarter Earnings Sneak Peek

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S&P 500 (NYSE:SPY) component Adobe Systems (NASDAQ:ADBE) will unveil its latest earnings on Wednesday, September 19, 2012. Adobe Systems offers a line of creative, business, web, and mobile software and services used by creative professionals, knowledge workers, consumers, original equipment manufacturers, developers, and enterprises.

Adobe Systems Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of 47 cents per share, a rise of 6.8% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 49 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 47 cents during the last month. Analysts are projecting profit to rise by 10% versus last year to $1.98.

Past Earnings Performance: The company is hoping to beat estimates after missing the mark for two straight quarters. Last quarter, it reported profit of 46 cents per share against an estimate of net income of 48 cents per share. The quarter before that, it missed forecasts by 4 cents.

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Wall St. Revenue Expectations: Analysts are projecting a rise of 8.8% in revenue from the year-earlier quarter to $1.11 billion.

Stock Price Performance: Between July 18, 2012 and September 14, 2012, the stock price had risen $2.70 (8.81%), from $30.65 to $33.35. The stock price saw one of its best stretches over the last year between August 2, 2012 and August 9, 2012, when shares rose for six straight days, increasing 6.8% (+$2.07) over that span. It saw one of its worst periods between November 16, 2011 and November 25, 2011 when shares fell for seven straight days, dropping 9.5% (-$2.71) over that span.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 3.03 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 3.14 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 11.7% to $1.25 billion while assets rose 7.6% to $3.77 billion.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 2.3% in the third quarter of the last fiscal year, 14.3% in the fourth quarter of the last fiscal year and 1.7% in the first quarter before increasing again in the second quarter.

Heading into this earnings announcement, net income has dropped 18.5% on average for the last four quarters.

A Look Back: In the second quarter, profit fell 2.4% to $223.9 million (45 cents a share) from $229.4 million (45 cents a share) the year earlier, missing analyst expectations. Revenue rose 9.9% to $1.12 billion from $1.02 billion.

Analyst Ratings: There are mostly holds on the stock with 13 of 24 analysts surveyed giving that rating.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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