Critical Review: Adobe (NASDAQ:ADBE) & ACI Worldwide (NASDAQ:ACIW)

Adobe (NASDAQ:ADBE) and ACI Worldwide (NASDAQ:ACIW) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, risk, earnings, profitability, valuation, dividends and institutional ownership.

Profitability

This table compares Adobe and ACI Worldwide’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Adobe	29.48%	64.48%	25.71%
ACI Worldwide	11.51%	16.76%	7.89%

Analyst Ratings

This is a summary of current ratings and target prices for Adobe and ACI Worldwide, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adobe	5	17	9	1	2.19
ACI Worldwide	0	2	2	0	2.50

Adobe presently has a consensus price target of $337.62, indicating a potential upside of 34.27%. ACI Worldwide has a consensus price target of $60.00, indicating a potential upside of 40.19%. Given ACI Worldwide’s stronger consensus rating and higher probable upside, analysts plainly believe ACI Worldwide is more favorable than Adobe.

Earnings & Valuation

This table compares Adobe and ACI Worldwide”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adobe	$23.77 billion	4.28	$7.13 billion	$17.17	14.64
ACI Worldwide	$1.76 billion	2.47	$226.66 million	$1.99	21.51

Adobe has higher revenue and earnings than ACI Worldwide. Adobe is trading at a lower price-to-earnings ratio than ACI Worldwide, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

81.8% of Adobe shares are held by institutional investors. Comparatively, 94.7% of ACI Worldwide shares are held by institutional investors. 0.2% of Adobe shares are held by company insiders. Comparatively, 1.1% of ACI Worldwide shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Adobe has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500. Comparatively, ACI Worldwide has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.

Summary

Adobe beats ACI Worldwide on 10 of the 15 factors compared between the two stocks.

About Adobe

Adobe Inc., together with its subsidiaries, operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content; and Document Cloud, a unified cloud-based document services platform. Its flagship product is Creative Cloud, a subscription service that allows members to access its creative products. This segment serves content creators, students, workers, marketers, educators, enthusiasts, and communicators. The Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences from analytics to commerce. This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, and executives across the C-suite. The Publishing and Advertising segment offers products and services, such as e-learning solutions, technical document publishing, web conferencing, document and forms platform, web application development, and high-end printing, as well as Advertising Cloud offerings. It also provides consulting, technical support, and learning services. The company offers its products and services directly to enterprise customers through its sales force and local field offices, as well as to end users through app stores and through its website at adobe.com. It also distributes products and services through distributors, value-added resellers, systems integrators, software vendors and developers, retailers, and original equipment manufacturers. The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. Adobe Inc. was founded in 1982 and is headquartered in San Jose, California.

About ACI Worldwide

ACI Worldwide, Inc., a software company, develops, markets, installs, and supports a range of software products and solutions for facilitating digital payments in the United States and internationally. The company operates in three segments: Banks, Merchants, and Billers. The company offers ACI Acquiring, a solution to process credit, debit, and prepaid card transactions, deliver digital innovation, and fraud prevention; ACI Issuing, a digital payment issuing solution for new payment offering; and ACI Enterprise Payments Platform that provides payment processing and orchestration capabilities for digital payments. It also provides ACI Low Value Real-Time Payments, a platform for processing real-time payments; and ACI High Value Real-Time Payments, a payments engine that offers multi-bank, multi-currency, 24×7 payment processing, and SWIFT messaging. In addition, the company offers ACI Payments Orchestration Platform for optimizing payments; omni-channel payment platform; ACI Fraud Management, a real-time approach to fraud management; and ACI Speedpay, an integrated suite of digital billing, payment, disbursement, and communication services. The company offers electronic bill presentment and payment services to consumer finance, insurance, healthcare, higher education, utility, government, telecommunications, and mortgage sectors; implementation services, include product installations and configurations, and custom software modifications; and business and technical consultancy, on-site support, product education, and testing services, as well as distributes or acts as a sales agent for software developed by third parties. It markets its products under the ACI Worldwide brand. The company was formerly known as Transaction Systems Architects, Inc. and changed its name to ACI Worldwide, Inc. in July 2007. The company was founded in 1975 and is based in Elkhorn, Nebraska.