ADBE
Adobe Inc.
Recurring SaaS
★ Quality 82/100Price today
$225.11
what the market pays
Worth
$607.71
calculated cycle value
Price is 63% below its value
charlieapp.co
Unusually large discount. A gap this wide usually means the market is pricing in a risk (AI disruption, for example) that the model does not penalise. A contrarian opportunity: high upside, but high risk — not an obvious one.
Price vs Intrinsic Value
The line is the price month by month; the green band marks when it's undervalued (−20% off value). When the price drops in there, the discount is real, not opinion.
Where does the value come from?
Software and subscriptions
Creative Cloud · Document Cloud
$606.81
per share
How it's calculated
High IV from economic FCF (GM 89%, ROCE 45%). AI risk: Creative Cloud substitution by Firefly/generative AI. CEO Narayen announced transition mar-2026 (-0.02 durability). ARR +11.5% FY2025 — deterioration not yet visible in the numbers. CAGR 4% scenario (severe): IV ~$280, still above price. Small position; add if ARR growth >8% in FY2027.
Net cash in the bank
cash minus financial debt, per share
Total calculated value
business + cash
How many times the cash flow
Recurring SaaS · vs 26 peers
You pay 9.7x times this business's cash flow; its sector median is 21.9x.
171% below what Charlie thinks it's worth (26.3x) — that gap is your safety margin.
Why Undervalued?
Its free cash flow is $23.07/share × 26.3x multiplier plus $0.90 in net cash = $607.71 in intrinsic value. Today's price of $225.11 is 170% below that value — there's a real safety margin to enter.
The price is 63% below the calculated value. There's a real safety margin.
The model asks for a discount to absorb estimate errors. That cushion is here.
If the business disappoints a little, the price should hold near $486.17.
At what price would buying make sense?
Entry zones
🟢 Undervalued
≤$486.17
-20% off Value
🟡 Discounted
≤$577.32
-5% off Value
🟢 Today
$225.11
+170% Valor
Undervalued
Today's price offers a real discount to the calculated value. For the long run, this is the kind of entry that builds wealth.
“Price is what you pay. Value is what you get.”
— Warren Buffett
Model updated · July 2026
The business
Adobe rents out the tools used to design almost everything you see.
Adobe sells creative software by subscription: Photoshop, Illustrator and Premiere in Creative Cloud, plus Acrobat and the PDF in Document Cloud, and Experience Cloud for marketing. It charges recurring monthly or annual fees; in FY2025 it billed $23.8B with an 89% gross margin. Almost all of it is revenue that repeats year after year.
The PDF is a global standard and Photoshop became a verb — people learn Adobe in college and never switch. The cost of migrating entire workflows is high and the ecosystem is integrated end to end. The moat is real, but generative AI threatens to open doors that used to be shut.
Revenue history
From $17.6B to $26.4B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $23.8B · FY2025
Of every $100 in sales, $70 goes to costs and operations; $30 is left as net profit (30% margin).
Catalysts and risks
ARR (annual recurring revenue) grew 11.5% in FY2025.
Monetizing Firefly built into Creative Cloud as a pricing lever.
Document Cloud and Acrobat keep expanding margin on top of the PDF standard.
Substitution by generative AI: Firefly, Midjourney and Canva compete where Photoshop once ruled.
CEO transition announced for March 2026; founder Narayen is stepping down.
Moat erosion isn't visible in the figures yet, and that breeds false calm.
Charlie's note
“You pay around 26x cash flow for a business with 89% margin and 11% growth — a sensible price for that kind of quality, as long as AI doesn't eat its lunch. Firefly will tell you whether the moat holds or was just painted on.”
Analysis · July 2026
So when would be a good price for Adobe Inc.?
Today it trades below what we calculate. If you want us to tell you when that changes —or when the value itself moves because the company reported— we will email you.
🔔 Email meFree · no card
Charlie informs, it doesn't advise. No information should be taken as a recommendation to buy or sell.