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Autodesk Stock Ambitious After Earnings Last Night

Autodesk reported earnings last night

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Software company Autodesk, Inc. (NASDAQ:ADSK) is striving to become one of the largest software companies in the world with its variety of products. Autodesk targets niche consumers with products designed for architecture, animation, engineering, construction, education, entertainment and much more.  Autodesk stock is currently up 41% year-to-date, more than doubling since hitting its two-year low of $125.38 on March 18. And while the shares are off their Nov. 9 record high of $276.68, their 30-day moving average has stepped up as support.

Autodesk reported earnings after the closing bel yesterday, and has beat earnings expectations on all four of its most recent quarterly reports.  In the third quarter of 2019, Autodesk beat earnings expectations by $0.06.  In the fourth quarter of 2019, Autodesk  beat expectations by a margin of $0.03. The company dropped its reported EPS for ADSK to $0.85 in the first quarter of 2020, but still managed to beat earnings expectations by $0.05. Most recently, Autodesk reported an increase in earnings for the second quarter of 2020, beating its earnings target by 9%. The company reported an EPS of $0.98 instead of the expected EPS of $0.90. For its upcoming third-quarter earnings report tonight, Autodesk's adjusted fiscal third-quarter earnings of $1.04 topped its 96 cent estimate. As a result, ADSK is higher in pre-market trading this morning.

Autodesk reached profitability recently, which has caused a massive spike in its stock. However, Autodesk stock had already been on a significant bullish run since 2016. This run can partially be attributed to the company’s various endeavors finally producing some revenue and net income growth. However, its massive price-earnings ratio of 157.92 of would suggest the company still has long ways to go. Nonetheless, Autodesk has serious ambition which explains the type of excitement it has received thus far from investors.

Furthermore, Autodesk can be expected to bring its price-earnings ratio down as it ramps up its revenue and net income. The company's current forward price-earnings ratio is 48.31. In addition, Autodesk holds $1.52 billion in cash and only carries $2.08 in total debt, which is impressive for a growth company like Autodesk.

Overall, it is unlikely that we will see Autodesk stock trading at a lower price five years from now, regardless of whether it achieves all its big ambitions or not, from a fundamental perspective. On the flip side, Autodesk stock’s potential upside is massive if the company can execute. 


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