By analyzing existing fundamental drivers between Adobe Systems and Black, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Black with a short position in Adobe Systems. Check out our
pair correlation module for more information.
Let's begin by analyzing the assets.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Adobe Systems has an asset utilization ratio of 127.02 percent. This indicates that the company is making $1.27 for each dollar of assets. An increasing asset utilization means that Adobe Systems is more efficient with each dollar of assets it utilizes for everyday operations.
Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as Adobe or Palo is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.
How important is Adobe Systems's Liquidity
Adobe Systems
financial leverage refers to using borrowed capital as a funding source to finance Adobe Systems Incorporated ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Adobe Systems financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Adobe Systems' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Adobe Systems' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Adobe Systems's total debt and its cash.
Correlation Between Adobe and Palo Alto Networks
In general, Stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Adobe Systems together with similar or unrelated positions with a negative correlation. For example, you can also add Palo Alto to your portfolio. If Palo Alto is not perfectly correlated to Adobe Systems it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Adobe Systems, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down.
Are you currently holding both Adobe Systems and Palo Alto in your portfolio? Please note if you are using this as a pair-trade strategy between Adobe Systems and Palo Alto, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses. Please check
pair correlation details between ADBE and PANW for more information.
Breaking down Adobe Systems Further
Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.
Revenue Breakdown
Let me now analyze Adobe Systems revenue. Based on the latest financial disclosure, Adobe Systems reported 16.14
B of revenue. This is 296.01% higher than that of the Technology sector and significantly higher than that of the
Software—Infrastructure industry. The revenue for all United States stocks is 71.07% lower than that of the stock. As for Black Knight we see revenue of 1.48
B, which is much higher than that of the Software—Infrastructure
| ADBE | 16.14 Billion | 91.6 |
| Sector | 0.0 | 0.0 |
| BKI | 1.48 Billion | 8.4 |
How will Adobe shareholders react to the next dip?
Latest maximum drawdown is at 14.25. Adobe Systems exhibits very low volatility with skewness of -0.52 and kurtosis of 0.52. However, we advise investors to further study Adobe Systems technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Adobe Systems' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Adobe Systems' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.
Adobe Systems Implied Volatility
Adobe Systems' implied volatility exposes the market's sentiment of Adobe Systems stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Adobe Systems' implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Adobe Systems stock will not fluctuate a lot when Adobe Systems' options are near their expiration.
Our Final Perspective on Adobe Systems
Although some other companies in the software—infrastructure industry are either recovering or due for a correction, Adobe Systems may not be performing as strong as the other in terms of long-term growth potentials. On the whole, as of the 16th of June 2022, we believe that at this point, Adobe Systems is very steady with
very small probability of distress within the next 2 years. From a slightly different point of view, the entity appears to be
undervalued. Our up-to-date 90 days buy-sell recommendation on the firm is
Strong Hold.
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Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Adobe Systems Incorporated. Please refer to our
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