Adobe Inc. (ADBE) vs CVS Health Corporation (CVS): Which Is the Better Buy in 2026?
As of 2026-06-19, ADBE is undervalued at $195, with a DCF intrinsic value of $558 and a margin of safety of 65%. CVS is overvalued at $98, with an intrinsic value of $28 and a margin of safety of -253%. Of the two, ADBE has the wider margin of safety.
Rewards
- ★Adobe Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 89.4% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Adobe Inc. scores 100/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
- ★Management has timed buybacks well — 2 out of 3 years showed value-accretive repurchases.
- ★PEG ratio of 0.28 suggests the stock is undervalued relative to its growth rate — paying less than 1x for each unit of earnings growth.
Risks
- ⚠Gross margin of 13.4% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠FCF yield of 6.2% suggests reasonable valuation assuming continued moderate growth.
- ⚠Trailing P/E of 43.1x is 58% above the historical average of 27.4x — the stock trades at a premium to its own history.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $195?
The market implies -1.6% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding -4.0%, reflecting heavy growth investment expected to generate future returns.
What growth rate is the market pricing in at $98?
The market implies +21.3% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +10.5%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.
Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Mr. Market is panicking — potential buying opportunity if fundamentals are strong"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: ADBE vs CVS
Is Adobe Inc. or CVS Health Corporation more undervalued in 2026?▼
Based on our discounted cash flow model, ADBE trades at a 65.0% margin of safety (intrinsic value $558 vs. price $195), compared to CVS's -253.5% margin of safety (intrinsic $28 vs. $98).
Which stock has a wider economic moat, Adobe Inc. or CVS Health Corporation?▼
ADBE scores 100/100 (Wide moat), while CVS scores 49/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is CVS Health Corporation in financial distress?▼
CVS's Altman Z-Score of 2.3 places it in the Grey zone, signaling elevated bankruptcy risk. ADBE scores 8.8 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Adobe Inc. or CVS Health Corporation?▼
Adobe Inc. (ADBE) generates a 11.9% free cash flow yield, compared to CVS Health Corporation's 6.2%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Adobe Inc. or CVS Health Corporation?▼
ADBE earns 37.8% ROIC versus CVS's 8.5%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.