Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 13 Aug 2026
ADBE· Technology
Adobe
Adobe's 39.9% ROIC and 89.3% gross margin demonstrate a strong moat, supported by excellent management and solid financial health.
Buffett fit
Strong fit
Owner
100
Durability
96
Management
93
Price
96
Score updated 26 Sept 2026 · analysis from 13 Aug 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 I owned Adobe outright, I would focus on expanding the Digital Experience segment to capture more enterprise clients.
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Adobe has been profitable for all of the last five years, with a maximum EPS decline of just 4.48%.
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The share count has decreased by 3.22% over the last five years, indicating a disciplined approach to with a buyback yield of 8.65%.
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Adobe's current of 11.9 and an yield of 11.61% indicate it is reasonably valued.
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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
5- 139.9% is well above the top-quintile sector cutoff of 13.4%.
- 2 of 89.3% leads the sector, significantly above the 60.6% top-quintile cutoff.
- 3 of 36.6% is more than double the sector top-quintile of 18.0%.
- 45-year EPS CAGR of 18.25% indicates strong growth potential.
Concerns
5- 1Current ratio of 1.00 suggests limited liquidity to cover short-term obligations.
- 2The debt/equity ratio of 0.57 indicates some , which could be a risk if interest rates rise.
- 3If compress below 80%, it would indicate a weakening competitive position.
- 4High reliance on the subscription model could be a risk if customer preferences shift.
Price history
$255-60.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Adobe generates revenue primarily through its Digital Media and Digital Experience segments, with $23.77B in TTM revenue. The Digital Media segment, which includes Creative Cloud subscriptions, accounts for a significant portion of this revenue, benefiting from high of 89.3%. The business model is highly scalable with strong customer retention.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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