Autodesk Inc (ADSK, Financial) experienced a daily gain of 3.49% and a three-month gain of 3.93%. The company's Earnings Per Share (EPS) stands at 3.86. This article seeks to answer whether Autodesk (ADSK) is significantly undervalued. The subsequent analysis provides a comprehensive evaluation of Autodesk's financial performance and intrinsic value.
Introduction to Autodesk Inc (ADSK, Financial)
Founded in 1982, Autodesk is a leading application software company serving various industries such as architecture, engineering, construction, product design and manufacturing, and media and entertainment. Autodesk's software caters to the design, modeling, and rendering needs of these industries. The company boasts over 4 million paid subscribers across 180 countries.
Autodesk's stock price stands at $211.49, while the GF Value, an estimation of fair value, is $342.99. This comparison suggests that Autodesk's stock might be significantly undervalued. The following is Autodesk's income breakdown:
Understanding the GF Value
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. The GF Value Line on our summary page gives an overview of the fair value that the stock should be traded at. It is calculated based on three factors:
- Historical multiples (PE Ratio, PS Ratio, PB Ratio and Price-to-Free-Cash-Flow) that the stock has traded at.
- GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of the business performance.
With a market cap of $45.20 billion, Autodesk (ADSK, Financial) appears to be significantly undervalued at its current price of $211.49 per share. Given that Autodesk is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength of Autodesk
Investing in companies with low financial strength could result in permanent capital loss. Autodesk has a cash-to-debt ratio of 0.79, ranking worse than 69.93% of 2690 companies in the Software industry. Based on this, GuruFocus ranks Autodesk's financial strength as 6 out of 10, suggesting a fair balance sheet. Here is a snapshot of Autodesk's debt and cash over the past years:
Profitability and Growth of Autodesk
Autodesk has been profitable 6 over the past 10 years. The company's profitability ranks 7 out of 10, indicating fair profitability. Over the past twelve months, the company had a revenue of $5.10 billion and Earnings Per Share (EPS) of $3.86. Its operating margin is 19.44%, ranking better than 87.99% of 2723 companies in the Software industry.
According to GuruFocus research, long-term stock performance is closely correlated with growth. Autodesk's average annual revenue growth is 16%, ranking better than 67.71% of 2391 companies in the Software industry. The 3-year average EBITDA growth is 35.7%, ranking better than 81.63% of 1992 companies in the Software industry.
ROIC vs WACC
Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. For the past 12 months, Autodesk's return on invested capital is 9.01, and its cost of capital is 12.75. Here is a historical comparison of Autodesk's ROIC vs WACC:
Conclusion
Overall, Autodesk (ADSK, Financial) stock appears to be significantly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks better than 81.63% of 1992 companies in the Software industry. To learn more about Autodesk stock, you can check out its 30-Year Financials here.
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