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If you are wondering whether Adobe’s current share price truly reflects what the business is worth, you are not alone. This article is built to help you connect the dots between the numbers and the valuation story.
Adobe’s shares last closed at US$301.07, with returns of 1.7% over the past 7 days, a 14.9% decline over the past 30 days, and returns of negative 9.7% year to date, negative 30.8% over 1 year, negative 18.8% over 3 years and negative 34.4% over 5 years.
Recent coverage has focused on how Adobe fits into key themes like artificial intelligence tools for creators, ongoing product updates across Creative Cloud and Document Cloud, and competitive pressures in digital media and experience software. These storylines help frame why the stock’s recent performance has drawn attention and why investors are reassessing what they are willing to pay for Adobe.
Right now, Adobe scores a 5/6 valuation check, which suggests there is more to unpack in how different methods assess its worth. We will compare those approaches before finishing with a way to look at valuation that ties them all together.
Find out why Adobe’s -30.8% return over the last year is lagging behind its peers.
A Discounted Cash Flow, or DCF, model takes the cash Adobe is expected to generate in the future, then discounts those projections back into today’s dollars to estimate what the whole business might be worth right now.
For Adobe, the latest twelve month free cash flow is about $9.77b. Analysts have provided explicit forecasts out to several years, and beyond that Simply Wall St extrapolates the trend to build a longer term view. Under this 2 Stage Free Cash Flow to Equity model, projected free cash flow for 2030 is $13.02b, with a full set of ten year projections discounted back to today.
Putting those discounted cash flows together gives an estimated intrinsic value of around $532.58 per share, compared with the recent share price of $301.07. On this basis, the model implies roughly a 43.5% discount, which points to Adobe trading below this estimate of its underlying value.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Adobe is undervalued by 43.5%. Track this in your watchlist or portfolio, or discover 872 more undervalued stocks based on cash flows.
ADBE Discounted Cash Flow as at Jan 2026
Story Continues
For a profitable company like Adobe, the P/E ratio is a useful shorthand for how much you are paying for each dollar of earnings. It lets you compare the market’s expectations for Adobe with other software businesses that also generate earnings.
What counts as a “normal” P/E typically reflects two things: how quickly earnings are expected to grow and how risky those earnings are perceived to be. Higher expected growth or lower perceived risk can justify paying a higher multiple, while slower growth or higher risk usually points to a lower multiple.
Adobe currently trades on a P/E of about 17.33x. That sits below the Software industry average of 30.76x and well below the peer average of 55.29x. Simply Wall St’s Fair Ratio for Adobe is 34.33x, which is its proprietary estimate of what a suitable P/E could be, given factors like earnings growth, margins, industry, market cap and risk profile. This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for Adobe’s own characteristics rather than assuming all companies should trade alike. With Adobe’s actual P/E at 17.33x versus a Fair Ratio of 34.33x, the shares screen as undervalued on this metric.
Result: UNDERVALUED
NasdaqGS:ADBE P/E Ratio as at Jan 2026
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1427 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way for you to put your own story about Adobe into the numbers by linking your view on its future revenue, earnings and margins to a fair value estimate.
A Narrative on Simply Wall St is your explanation of what you think is happening with a company, connected directly to a financial forecast and a resulting fair value, rather than a loose story that sits separate from the data.
On the Community page, used by millions of investors, you can pick or create a Narrative, see the fair value it implies, then compare that figure to Adobe’s current share price to help you judge whether the stock looks attractive or stretched based on your own assumptions.
Narratives update automatically as new news or earnings arrive, so an optimistic Narrative for Adobe with higher forecast margins and growth can sit alongside a cautious one with lower assumptions, giving you a clear view of how different investors can look at the same company and reach very different fair values.
Do you think there’s more to the story for Adobe? Head over to our Community to see what others are saying!
NasdaqGS:ADBE 1-Year Stock Price Chart
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ADBE.
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