ADOBE DCF STOCK ANALYSIS. BUY OR SELL?

DCF stock analysis.

Author

Giacomo Mondonico
May 20, 2025

In partnership with

Find out why 1M+ professionals read Superhuman AI daily.

In 2 years you will be working for AI

Or an AI will be working for you

Here's how you can future-proof yourself:

  1. Join the Superhuman AI newsletter – read by 1M+ people at top companies

  2. Master AI tools, tutorials, and news in just 3 minutes a day

  3. Become 10X more productive using AI

Join 1,000,000+ pros at companies like Google, Meta, and Amazon that are using AI to get ahead.

Adobe Stock Analysis

Adobe Inc. is a global software company that provides digital solutions for creative professionals, enterprises, and individuals. Its offerings include well-known software such as Photoshop, Acrobat, and Illustrator, which help facilitate creative work, document management, and marketing.

Adobe's business is organized into three primary segments:

  1. Creative Cloud: This segment encompasses tools for digital content creation such as Photoshop, Illustrator, Premiere Pro, and Adobe Stock. It contributes the largest portion of Adobe's revenue, especially driven by its subscription model.

  2. Document Cloud: This includes products like Adobe Acrobat and Adobe Sign, which focus on document management and electronic signatures. This segment supports digital workflows, offering solutions for managing documents and improving productivity.

  3. Experience Cloud: A suite of marketing and customer experience solutions, this segment focuses on helping enterprises provide personalized digital experiences. It includes tools for analytics, marketing automation, and customer relationship management (CRM).

For fiscal year 2024 (through the third quarter), Adobe's total revenue reached $15.9 billion, with the vast majority derived from its subscription services ($15.2 billion). The Creative Cloud and Document Cloud accounted for much of this revenue, reflecting the company's heavy reliance on subscription-based models. Meanwhile, Experience Cloud also plays a key role, serving enterprise clients with digital marketing and data-driven solutions.

Do you follow us on X / Twitter Yet?

DCF Analysis Assumptions

Here’s my assumptions:

Risk Free Rate (10 Years Interest Rate Swap): 4.224%

Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.33%

Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 1.5%

HISTORICAL DATA

Revenue growth in the last 10 years (CAGR): 16.19%

Earnings growth in the last 10 years (CAGR): 35.10%

Unlevered Free Cash Flow growth in the last 10 years (CAGR): 19.15%

FUTURE ASSUMPTIONS

End of Year FCF growth: 8%

Growth until end of 2026: 18%

Growth until end of 2034: 12%

Perpetual growth: 3.2%

Net Debt: -0.875B (Positive)

Restricted Stock Units Present Value Assumption: 3.128B

Stock Valuation based on these assumptions: $794

Last update 05/18/2025

Data Source: Seeking Alpha

All the content in this newsletter is for informational purposes only. THIS IS NOT FINANCIAL ADVICE! Do your own Due Diligence before investing or contact a professional financial advisor.

I don’t have a position in Adobe (ADBE) and I don’t plan to add a position in the coming days.