Buffett Brain · Research note
Score updated 26 Sept 2026
ADBE· Technology
Adobe
Adobe's 89% gross margin and 39.9% ROIC make it a quintessential Buffett business with a strong moat and solid long-term prospects.
Buffett fit
Strong fit
Owner
100
Durability
96
Management
93
Price
85
Score updated 26 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned 100% of Adobe, we'd be confident in its ability to generate substantial , evidenced by $9.85B in FCF and a 9.42% yield.
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Adobe's durability is supported by its consistent profitability over the past 5 years and a 5-year EPS CAGR of 18.25%.
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Adobe's is commendable, with a yield of 8.65% and a share count CAGR of -3.22%, indicating effective use of retained earnings.
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With a of 14.7 and an yield of 9.42%, Adobe is attractively priced for a business of its quality.
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
8- 189.3% is top-quintile in the sector.
- 239.9% is significantly above the sector's 13.4% cutoff.
- 3EPS CAGR of 18.25% over 5 years reflects strong growth.
- 4Interest coverage ratio of 34.2 indicates financial robustness.
Concerns
5- 1Current ratio of 1.00 suggests limited short-term liquidity cushion.
- 2Moderately complex business model requires ongoing innovation.
- 3No dividend yield, which may deter income-focused investors.
- 4Potential technological disruption in the software industry.
Price history
$271-58.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Adobe generates revenue by offering a suite of software products for content creation and digital marketing. The Digital Media segment, including Creative Cloud, is a major contributor to its $23.77B revenue. With a of 89.3%, Adobe's unit economics are exceptionally strong, reflecting its and efficient operations.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 23, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
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