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Both Adobe (ADBE) and Coinbase (COIN) impressed analysts by beating Wall Street expectations in their last reported quarters. Compare the fundamentals to identify which one is the better buy now.
This article evaluated Adobe Inc. (Adobe) and Coinbase Global, Inc. (coin) now decide which one is worth buying. Based on a fundamental comparison of these stocks, it looks like ADBE has better upside for the reasons explained throughout this article.
Last year, the tech industry was under pressure from challenges posed by high inflation and aggressive Fed rate hikes. The Fed is likely to hike rates twice by the end of the year, but is expected to start cutting rates next year, which could be good news for tech stocks.
ADBE’s second-quarter EPS and earnings beat analyst expectations. EPS beat consensus estimates by 3.2%, and revenue beat analyst estimates by 0.9%. Similarly, COIN beat his EPS and earnings expectations for the first quarter. EPS beat consensus estimates by $1.32, while revenue beat analyst estimates by 18.1%.
ADBE Chairman and CEO Shantanu Narayan said: “Adobe delivered record revenue in the second quarter, demonstrating strong demand across Creative Cloud, Document Cloud, and Experience Cloud. Leveraging models and ubiquitous product interfaces, we are well positioned to lead the new era of generative AI.”
After posting better-than-expected earnings in the first quarter, COIN said: “We reduced costs, doubled our operational excellence and risk management, and continued to drive product innovation and regulatory clarity. We are making meaningful progress in our efforts.”
ADBE expects total revenue for the third quarter to be between $4.83 billion and $4.87 billion. The company’s digital media net new ARR is projected to be approximately $410 million. Additionally, the non-GAAP price is expected to range from $3.95 to $4. The company expects total revenue for fiscal 2023 to be between $19.25 billion and $19.35 billion.
The company’s digital experience subscription revenue is expected to be between $4.3 billion and $4.35 billion. Also, non-GAAP EPS is expected to be between $15.65 and $15.75.
COIN expects revenue from subscriptions and services to be around $300 million in the second quarter, while sales and marketing expenses are expected to be between $80 million and $90 million.
Earlier this month, COIN found itself in a bind after US regulators filed a new lawsuit alleging that the cryptocurrency platform was operating as an unregistered securities platform and brokerage service. In its complaint, the SEC alleges that COIN has made billions of dollars acting as an intermediary between cryptocurrency sellers and buyers, but has failed to provide investors with legal protection while acting as a broker.
“For years, Coinbase has defied the regulatory structure and circumvented disclosure requirements put in place by Congress and the SEC to protect the domestic securities market and investors,” the SEC said.
ADBE is the clear winner when it comes to price performance. ADBE stock delivered positive returns across all timeframes. Over the past nine months, ADBE has risen by 66.4% while COIN has fallen by 8.7%.
Here’s why I think ADBE can perform better in the short term:
Recent financial results
ADBE’s total revenue for the second quarter ended June 2, 2023 was $4.82 billion, up 9.8% year-on-year. Net cash from operating activities was $2.14 billion, up 4.9% year-over-year. The company’s non-GAAP operating income increased 10.4% year-over-year to $2.18 billion.
Additionally, non-GAAP net income increased 13.2% year-over-year to $1.79 billion. Non-GAAP EPS was $3.91, up 16.7% year over year.
COIN’s total revenue for the first quarter of the fiscal year ended March 31, 2023 was $772.53 million, down 33.8% year-on-year. Net loss fell 81.6% year-on-year to $78.9 million. Net loss per share was $0.34, down 82.8% year-on-year. The company’s Adjusted EBITDA increased significantly year-on-year to $283.65 million.
Expected financial performance
Analysts expect ADBE’s EPS to grow 14.7% and 12.7% year over year to $15.72 and $17.72 in 2023 and 2024, respectively. Sales in 2023 and 2024 are expected to increase 9.8% and 12.1% year-on-year to $19.33 billion and $21.66 billion, respectively. EPS and revenue for the quarter to August 2023 are expected to grow 17% and 9.8% year over year to $3.98 billion and $4.87 billion, respectively.
Street expects COIN’s EPS to continue to be negative in 2023 and 2024. Sales in fiscal 2023 are expected to fall 11.6% year-on-year to $2.82 billion. Meanwhile, sales in fiscal 2024 are expected to rise 12.6% year-on-year to $3.18 billion.
Profitability
ADBE’s subsequent 12-month revenue is 6.8 times the revenue generated by COIN. ADBE is more profitable and EBITDA margin The net profit margin was 37.03%, 26.34%, while COIN was minus 56.39%, 83.60%. Also, ADBE’s asset turnover ratio is 0.68 times, while COIN’s is 0.03 times.
evaluation
In terms of future EV/sales, ADBE is currently trading at 11.20x, 159.3% higher than COIN’s 4.32x. ADBE’s price-to-sales ratio of 11.99 times in the last 12 months is 151.4% higher than COIN’s 4.77 times.
Therefore, COIN is relatively affordable.
power rating
ADBE’s overall rating is B, which corresponds to our own rating of ‘Buy’. power rating system. On the other hand, COIN’s overall rating is D, which is equivalent to selling. The POWR rating is calculated by considering 118 different factors, with each factor being optimally weighted.
Our proprietary rating system also evaluates each stock based on eight different categories. ADBE has earned an A grade for quality along with high profitability. The low profitability of COIN justifies a D grade in quality.
The ADBE analyst’s favorable forecast justifies a B grade for sentiment. COIN, on the other hand, has a sentiment grade of C, consistent with analysts’ mixed expectations.
Of the 135 stocks, software application Within the same industry, ADBE ranks 17th, while COIN ranks 125th within the same industry.
In addition to the above, we also evaluated the growth, value, momentum and stability of both stocks. click here Get all COIN ratings to view ADBE ratings here.
winner
ADBE reports record revenue and strong annual recurring revenue (ARR) and profitability growth in the second quarter, enabling the company to raise its annual targets. The company remains well-positioned to take advantage of over $200 billion in market opportunities thanks to its investments in innovation.
On the other hand, the cryptocurrency industry remains highly volatile and COIN’s outlook looks uncertain. The company is in the middle of a lawsuit from the SEC for violating regulatory structures and evading disclosure requirements mandated by Congress and the SEC to protect investors.
Considering these factors, ADBE may be a better option than COIN.
Our research shows that investing in stocks with an overall rating of ‘strong buy’ or ‘buy’ increases your odds of success.Software – See all top rated stocks in the applications industry here.
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ADBE shares were trading at $477.90 per share Friday morning, up $0.32 (+0.07%). Year-to-date, ADBE is up 42.01%, while the benchmark S&P 500 index is up 14.31% over the same period.
About the author: Dipanjan Benture
Dipanjan has been interested in the stock market since elementary school. This earned him a master’s degree in Finance and Accounting. Today, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in financial markets.
post Coinbase Global (COIN) vs. Adobe (ADBE): Which Stock Should You Buy Now? first appeared in stocknews.com