What happened

Shares of Adobe (ADBE -0.59%) ticked up a solid 4.1% (through 10:45 a.m. ET) on Thursday morning after the company reported earnings that beat on both the top and bottom lines.

Analysts had expected the software company to report only $3.68 per share in adjusted earnings for its fiscal first quarter of 2023, on sales of $4.62 billion. In fact, Adobe earned $3.80 per share, and sales were $4.66 billion -- and Adobe beat on guidance as well.   

So what

With sales rising 9% despite currency exchange rate headwinds, Adobe set a new record for quarterly sales in fiscal Q1. Earnings were also better than expected -- and helped by the fact that Adobe bought back 5 million shares in the quarter, concentrating overall profits among fewer shares outstanding. Nevertheless, when calculated according to generally accepted accounting principles (GAAP), Adobe's earnings growth was less impressive than the headline adjusted profits make things look.

GAAP profits for the quarter were only $2.71 per share, and up only 2% year over year.  

Now what

While investors are cheering the earnings beat -- and management's guidance for roughly $11 per share in GAAP profits this fiscal year 2023 -- there are reasons to be suspicious of Adobe stock's value given the muted pace of GAAP earnings growth.

Consider: If Adobe hits its earnings target this year, $11 per share divided into an almost $350 share price works out to a price-to-earnings ratio of 31.5. That's an awful lot to pay for a supposed growth stock that actually grew GAAP earnings only 1% last year, and that grew just 2% this past quarter. For that matter, Adobe's earnings forecast seems to envision only 9% earnings growth through the end of this year. And yes, 9% is better than 1%, or 2% -- but I'm not at all convinced it's fast enough to justify a 31.5 P/E.

If this is the best Adobe can offer, I suspect growth investors will soon lose interest and go off in search of better prospects.