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Adobe (ADBE) stock warrants your attention. Why? Because it offers thick margins at a reduced price. Here are some statistics. Revenue Growth: Adobe experienced growth of 10.7% LTM and 10.5% on average over the last three years. Recent Profitability: Approximately 42.2% operating cash flow margin and 36.2% operating margin LTM. Long-Term Profitability: Roughly 39.0% operating cash flow margin and 35.4% operating margin over the last three years on average. Available At A Discount: Priced at a P/S multiple of 6.5, ADBE stock is currently at a 36% discount compared to a year ago. Adobe sign with logo mounted on building exterior, San Francisco, California, September 18, 2025. (Photo by Smith Collection/Gado/Getty Images) Gado via Getty Images While growth in revenue is beneficial, this should not be viewed merely from a growth perspective. Pricing power along with high margins contributes to consistent and predictable profits and cash flows, which mitigates risk and enables capital to be reinvested. The market typically rewards such stability. Beyond the financials, a couple of structural advantages drive Adobe’s outlook. The company is a leader in digital media and enterprise software, and has pivoted to a subscription model that drives recurring revenue. Its integrated workflow solutions create high switching costs, helping customer retention. The company is also witnessing growing adoption of its creative and enterprise tools enhanced by generative AI. For context, Adobe offers a range of software solutions globally, including its Creative Cloud subscription, catering to enterprise clients across Digital Media, Digital Experience, and Publishing & Advertising sectors. MORE FOR YOU However, do these figures truly paint the complete picture? Explore Buy or Sell ADBE Stock to determine whether Adobe possesses an enduring advantage that remains resilient beneath the surface. Quiz time: Over the past 5 years, which index do you believe the Trefis High Quality Portfolio has outperformed – the S&P 500, S&P 1500 Equal Weighted, or both? The answer may surprise you. Discover how our advisory framework can tilt the odds in your favor. Stocks Like These Can Outperform. Here Is the Data Here’s our selection process: We target stocks with a market cap greater than $10 billion and filter out those exhibiting high CFO (cash flow from operations) margins or operating margins. We also exclusively focus on stocks that have significantly decreased in value over the past year. Below are the statistics for stocks where this selection strategy has been applied since 12/31/2016. Average 12-month forward returns of nearly 19% 12-month win rate (the percentage of selections yielding positive returns) of about 72% However, Consider the Risks That being said, Adobe has encountered substantial declines in difficult times. It fell about 72.5% during the Dot-Com crash and 67% during the Global Financial Crisis. In the 2022 inflation shock, the decline was around 60%. Even the less severe downturns, such as those in 2018 and during the Covid pandemic, resulted in a loss of approximately 25% of its value. Therefore, despite the favorable aspects, Adobe does not escape the impact when markets decline. Nonetheless, the risks are not confined to major market crashes. Stocks can drop even during strong markets – consider events like earnings announcements, business updates, and changes in outlook. Refer to ADBE Dip Buyer Analyses to learn how the stock has bounced back from steep drops in the past. The Trefis High Quality (HQ) Portfolio, featuring a selection of 30 stocks, has a proven history of consistently outperforming its benchmark, which includes all three – the S&P 500, S&P mid-cap, and Russell 2000 indices. What accounts for this? Collectively, HQ Portfolio stocks delivered superior returns with lower risk compared to the benchmark index; it’s a smoother ride, as demonstrated in the HQ Portfolio performance metrics. Editorial StandardsReprints & Permissions
