Autodesk (ADSK) Stock Gains Ahead of Today’s Earnings Report

Autodesk (ADSK) stock is rising before the company’s fiscal 2016 third quarter financial report, due out this afternoon after the market close.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Autodesk (ADSK) - Get Report stock is increasing 0.49% to $61.55 in mid-morning trading on Thursday before the company reports its financial results for the fiscal 2016 third quarter, which are scheduled to be released after the market close today.

The company is expected to report a year-over-year decline in earnings per share and revenue as the main source of sales shifts to subscription-based services from licensed products.

Analysts have estimated earnings of 8 cents per share on $591.55 million for the quarter ended October 31.

Last year, Autodesk posted earnings of 25 cents per share on $618 million in revenue for the fiscal 2014 third quarter.

The San Rafael, CA-based company designs software and services that offer business solutions for several industries, including architecture, manufacturing, consumer and entertainment businesses.

Separately, TheStreet Ratings team rates AUTODESK INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

We rate AUTODESK INC (ADSK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • After a year of stock price fluctuations, the net result is that ADSK's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • ADSK's debt-to-equity ratio of 0.78 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that ADSK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.12 is high and demonstrates strong liquidity.
  • Despite the weak revenue results, ADSK has outperformed against the industry average of 17.3%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, AUTODESK INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $77.20 million or 19.75% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, AUTODESK INC has marginally lower results.
  • You can view the full analysis from the report here: ADSK

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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