Financial Analysis: Adobe (NASDAQ:ADBE) vs. PowerSchool (NYSE:PWSC)

PowerSchool (NYSE:PWSC) and Adobe (NASDAQ:ADBE) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Earnings & Valuation

This table compares PowerSchool and Adobe’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PowerSchool	$697.65 million	5.17	-$31.14 million	($0.19)	-93.63
Adobe	$19.41 billion	10.95	$5.43 billion	$10.46	45.36

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

Analyst Recommendations

This is a summary of recent ratings and target prices for PowerSchool and Adobe, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PowerSchool	0	1	9	0	2.90
Adobe	2	6	19	0	2.63

PowerSchool presently has a consensus target price of $27.67, suggesting a potential upside of 55.52%. Adobe has a consensus target price of $620.72, suggesting a potential upside of 30.83%. Given PowerSchool’s stronger consensus rating and higher probable upside, equities research analysts clearly believe PowerSchool is more favorable than Adobe.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PowerSchool	-4.46%	6.08%	2.92%
Adobe	24.08%	39.12%	21.21%

Volatility & Risk

PowerSchool has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Adobe has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500.

Insider & Institutional Ownership

65.3% of PowerSchool shares are held by institutional investors. Comparatively, 81.8% of Adobe shares are held by institutional investors. 0.6% of PowerSchool shares are held by insiders. Comparatively, 0.2% of Adobe shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Adobe beats PowerSchool on 11 of the 14 factors compared between the two stocks.

About PowerSchool

PowerSchool Holdings, Inc., together with its subsidiaries, offers cloud-based software to the K-12 education market in the United States, Canada, and internationally. Its solution embedded in school workflows and is used on daily basis by educators, students, administrators, and parents in schools and districts. In addition, the company provides cloud-based technology platform helps schools and districts manage state reporting and related compliance, special education, finance, human resource, talent, registration, attendance, funding, learning, instruction, behavior, grading, college and career readiness, assessments, and analytics. The company serves state departments of education, public school districts, charter schools, independent schools, virtual schools, and others. PowerSchool Holdings, Inc. was incorporated in 2020 and is headquartered in Folsom, California.

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.