With Autodesk Inc (ADSK, Financial) experiencing a daily loss of 6.9% and a modest 3-month gain of 1.04%, investors are scrutinizing the company's valuation. A key figure in this analysis is the Earnings Per Share (EPS), which stands at 4.04. This article delves into whether Autodesk, at its current market behavior, is modestly undervalued and what this means for potential investors. The following analysis will explore the intricate details of Autodesk's valuation to guide informed investment decisions.
Company Introduction
Autodesk Inc (ADSK, Financial), founded in 1982, is a renowned application software company that has cemented its role in various industries, including architecture, engineering, construction, product design, manufacturing, and media and entertainment. The company's software solutions are pivotal for design, modeling, and rendering needs across these sectors. With a subscriber base exceeding 4 million across 180 countries, Autodesk has established a robust market presence. The company's market capitalization stands at $43.50 billion, with sales reaching $5.20 billion. When juxtaposed with the GF Value, which estimates Autodesk's fair value at $270.82 per share, the current stock price of $203.42 suggests that the company may be modestly undervalued.
Summarize GF Value
The GF Value is a proprietary measure that reflects the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, as well as future business performance estimates. Autodesk (ADSK, Financial) appears modestly undervalued according to the GF Value Line, suggesting that its stock price could present a higher future return than its business growth alone might indicate. This assessment considers the stock's historical multiples, GuruFocus' unique adjustment factor, and analyst projections for Autodesk's future business performance.
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Financial Strength
Investing in companies with robust financial strength is crucial to mitigate the risk of capital loss. Autodesk's financial strength is fair, with a cash-to-debt ratio of 0.78, though it falls short of the industry standard. Despite this, the company's overall financial strength has been rated 6 out of 10 by GuruFocus, indicating a stable financial position.
Profitability and Growth
Profitable companies, especially those with consistent profitability over time, are generally safer investments. Autodesk has a solid track record, having been profitable for 6 out of the past 10 years. With a revenue of $5.20 billion and an EPS of $4.04, alongside an impressive operating margin of 19.42%, the company's financial health looks promising. GuruFocus ranks Autodesk's profitability at 7 out of 10, which is reflective of its fair profitability.
When it comes to growth, Autodesk's 3-year average revenue growth rate surpasses 67.15% of its peers in the software industry. Furthermore, the company's 3-year average EBITDA growth rate is an impressive 35.7%, outperforming 82.11% of the companies in the same industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) can reveal its value creation efficiency. Autodesk's ROIC of 9.26 indicates that it generates cash flow effectively relative to the capital invested. However, the company's WACC of 13.07 suggests that the cost of capital is currently higher than the return, which could be an area of concern for value creation.
Conclusion
Overall, Autodesk's stock appears to be modestly undervalued, with fair financial health and profitability. Its growth outshines a significant portion of the software industry, indicating potential for future value creation. For a deeper understanding of Autodesk's financial landscape, investors are encouraged to review the company's 30-Year Financials.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
