Comparing Profitability of these two stocks: Adobe Systems Incorporated (ADBE), Carbonite, Inc. (CARB)

The shares of Adobe Systems Incorporated (NASDAQ:ADBE) and Carbonite, Inc. (NASDAQ:CARB) were among the active stocks of the last trading sessions. Adobe Systems Incorporated (NASDAQ:ADBE) declined to -2.3% closing at the price of $239.64 whereas the shares of Carbonite, Inc. (NASDAQ:CARB) declined -24.05% with the decrease of -8.54 points closing at the price of $26.97. Adobe Systems Incorporated has currently increase 3.74% in its stock over the period of 6-months while its rival Carbonite, Inc. subtracted -17.65% in the previous 6-months.

Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.

Returns and Profitability

Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.

The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Adobe Systems Incorporated (NASDAQ:ADBE) is 16.7% while the ROI of Carbonite, Inc. (NASDAQ:CARB) is -4.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ADBE’s EBITDA Margin is 38.78 whereas CARB’s is 47.57.

Both the profitability ratios suggest a mixed sentiment for Adobe Systems Incorporated (NASDAQ:ADBE) and Carbonite, Inc. (NASDAQ:CARB).

EPS & Surprise Factor

Adobe Systems Incorporated (NASDAQ:ADBE) reported $1.73/share EPS for the previous quarter where analysts were predicting an EPS to be $1.69/share Thus beating the analyst Estimates with a Surprise Factor of 2.4 Percent. While, Carbonite, Inc. (NASDAQ:CARB) reported EPS of $0.48/share in the last quarter. The analysts projected EPS of $0.41/share depicting a Surprise of 17.1 Percent.

Taking a look at Earnings per Share, Carbonite, Inc. tends to be beating the analyst estimates more than Adobe Systems Incorporated. so CARB is more profitable than ADBE.

Technical Analysis of Adobe Systems Incorporated & Carbonite, Inc.

Moving average convergence divergence (MACD) shows that Adobe Systems Incorporated (NASDAQ:ADBE) is on a PRICE RELATIVITY trend While Carbonite, Inc. (NASDAQ:CARB) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Adobe Systems Incorporated was in BEARISH territory and Carbonite, Inc. was in BEARISH territory.

ADBE’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CARB’s candle is BEARISH with HIGH.

EPS Growth Rate: ADBE’s 32.6% versus CARB’s 25.8%

Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Adobe Systems Incorporated (NASDAQ:ADBE) is predicted at 32.6% while Carbonite, Inc. (NASDAQ:CARB) stands at 25.8%. These numbers suggest that ADBE is more suitable investment in terms of EPS growth rate.

Financial Risk and Liquidity Concerns

The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of ADBE stands at 1.7 while CARB is at 0.7 whereas the debt ratio of the prior is 0.21 while the debt ratio of the later is 2.85.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2 for ADBE and 1.8 for CARB which means ADBE has Buy rating whereas CARB has Buy rating.

Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for ADBE is $290.35 which is 17.47% of its current price while CARB has price target of 42.73 which is 36.88% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

ADBE currently has price to earning P/E ratio of 45.24 whereas CARB has 0 while the forward P/E ratio for the prior stands at 30.05 and for the later it depicts the value of 14.97.

The price to Book P/B for ADBE is 13.25, Price to Sale is at 13.97 and for CARB these ratios stand at 11.28 and 4.5.