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Trade-Ideas: Autodesk (ADSK) Is Today's "Perilous Reversal" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Autodesk ( ADSK) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Autodesk as such a stock due to the following factors:

  • ADSK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $138.6 million.
  • ADSK has traded 5.1 million shares today.
  • ADSK is down 3% today.
  • ADSK was up 7.7% yesterday.

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More details on ADSK:

Autodesk, Inc. operates as a design software and services company worldwide. The stock currently has a dividend yield of 21.8%. ADSK has a PE ratio of 36.5. Currently there are 7 analysts that rate Autodesk a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Autodesk has been 2.5 million shares per day over the past 30 days. Autodesk has a market cap of $8.1 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 2.08 and a short float of 1.8% with 1.12 days to cover. Shares are up 2.2% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Autodesk as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that ADSK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.41 is high and demonstrates strong liquidity.
  • AUTODESK INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, AUTODESK INC reported lower earnings of $1.07 versus $1.22 in the prior year. This year, the market expects an improvement in earnings ($1.96 versus $1.07).
  • ADSK, with its decline in revenue, slightly underperformed the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for AUTODESK INC is currently very high, coming in at 93.63%. Regardless of ADSK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADSK's net profit margin of 10.98% is significantly lower than the industry average.

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