Adobe Inc.’s (

NASDAQ:ADBE

) most recent earnings update in November 2018 revealed that the business experienced a large tailwind,candied yam recipes with marshmallows and pineapple leading to a high double-digit earnings growth of 53%. Today I want to provide a brief commentary on how market analysts perceive Adobe’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Adobe

Market analysts’ consensus outlook for this coming year seems rather muted, with earnings increasing by a single digit 7.9%. The growth outlook in the following year seems much more optimistic with rates generating double digit 41% compared to today’s earnings, and finally hitting US$4.5b by 2022.

NasdaqGS:ADBE Future Profit January 1st 19

Even though it’s informative knowing the rate of growth year by year relative to today’s level, it may be more insightful to estimate the rate at which the earnings are growing on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Adobe’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 21%. This means, we can presume Adobe will grow its earnings by 21% every year for the next few years.

Next Steps:

For Adobe, I’ve compiled three pertinent aspects you should further research:

Financial Health

: Does it have a healthy balance sheet? Take a look at our

free balance sheet analysis with six simple checks

on key factors like leverage and risk.

Valuation

: What is ADBE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The

intrinsic value infographic in our free research report

helps visualize whether ADBE is currently mispriced by the market.

Other High-Growth Alternatives

: Are there other high-growth stocks you could be holding instead of ADBE? Explore

our interactive list of stocks with large growth potential

to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

[email protected]

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