Autodesk Inc (ADSK, Financial) has recently experienced a daily loss of 5.14%, yet it has seen a gain of 12.18% over the past three months. With an Earnings Per Share (EPS) of 4.21, investors are keen to understand if the current stock price reflects the company's true value. This article delves into the intrinsic valuation of Autodesk (ADSK), aiming to determine whether the stock is fairly valued and what that implies for potential investors.
Company Introduction
Founded in 1982, Autodesk is a renowned application software company that caters to diverse industries, including architecture, engineering, construction, product design, manufacturing, and media and entertainment. With a subscriber base exceeding 4 million across 180 countries, Autodesk's software is pivotal for design, modeling, and rendering tasks. Currently, Autodesk's shares are trading at $247.29, with a market capitalization of $52.90 billion, and a GF Value of $256.08, suggesting a close alignment with its fair value. This introduction sets the stage for a detailed valuation analysis of Autodesk (ADSK, Financial).
Summarize GF Value
The GF Value is a unique metric that calculates the intrinsic value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. Autodesk (ADSK, Financial) is considered fairly valued according to this measure, indicating that its current price is in line with the fair value that the stock should be traded at. This assessment suggests that the long-term return of Autodesk's stock is likely to mirror the rate of its business growth.
Financial Strength Assessment
Investing in companies with robust financial strength is critical to minimize the risk of capital loss. Autodesk's cash-to-debt ratio stands at 0.86, positioning it lower than 68.87% of its industry peers. Despite this, the company's financial strength has been rated a solid 7 out of 10 by GuruFocus, reflecting a fairly healthy balance sheet.
Profitability and Growth
Profitable companies, especially those with consistent performance, are generally considered safer investments. Autodesk boasts a commendable track record, having been profitable for 6 out of the last 10 years. With a revenue of $5.50 billion and an Earnings Per Share (EPS) of $4.21, alongside an operating margin of 20.52%, Autodesk outperforms 89.42% of its competitors. Furthermore, the company's growth has been impressive, with an average annual revenue increase of 14.2%, ranking it favorably within the industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another method to gauge profitability. Autodesk's ROIC of 9.08 is currently below its WACC of 12.61, suggesting that the company needs to improve its capital efficiency to create value for shareholders.
Conclusion
Overall, Autodesk (ADSK, Financial) is deemed to be fairly valued in the current market. The company's financial health is stable, and its profitability is sound. Its growth is commendable, surpassing many in the software industry. For a deeper insight into Autodesk's financials, interested parties can explore its 30-Year Financials here.
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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.
