Tech giant Adobe Inc (NASDAQ:ADBE) is going to release its fourth-quarter earnings results this week. It's been a solid year for the company with its share price rising 47% thus far, outperforming the S&P 500 was has risen by 15%.
The company's been growing even amid the coronavirus pandemic. In its third-quarter results, released on Sept. 15, Adobe's top line hit a record of $3.23 billion and were up 14% year over year. However, despite the strong results, shares of Adobe are down 1% over the past three months. Part of the reason for that could be that on a quarter-over-quarter basis, sales were only up 3%. And in the previous period, they were up a little over 1%. It could be a sign that its sales are approaching a peak.
Another problem is the stock's rich valuation. Today, the stock is trading at 60 times earnings and a forward price-to-earning multiple of 43. Although it's not near its 52-week high of $536.88, Adobe's stock may be running out of room to rise, even with an earnings beat.
Adobe is a solid long-term stock to buy with lots of recurring revenue and a loyal customer base. But at its current price point, it's a bit too expensive to consider buying shares of the company today. The stock didn't get much of a boost from its last quarterly results and it may not get one this time around, either.
Investors wanting to buy shares of Adobe are likely better off waiting for a dip in price.
Tech Insider
