Autodesk (ADSK) Stock, 0 to 60: Can Acceleration Continue?
NEW YORK (TheStreet) -- Autodesk (ADSK) - Get Report went from 0 to 60 the past month and it has now reached an interesting crossroad.
Chart readers have to be impressed with the rapid advance in this chart of ADSK, above. ADSK turned on a dime at the beginning of October, volume increased and the On-Balance-Volume line (OBV) turned up to confirm the gains. Prices closed above the 50-day simple moving average and kept going. The 200-day moving was cleared at the end of the month. The trend following Moving Average Convergence Divergence (MACD) oscillator gave a bullish crossover and is above the zero line. The chart of ADSK shows some prior resistance in February, March and April in the $60 to $65 area, but ADSK has already pushed more than halfway through that zone.
In this longer-term view of ADSK, above, we can see prices are above the 40-week moving average, the OBV line is poised to make a new high and the MACD oscillator is nearly above the zero line. Prices are extended on the upside, so it might be prudent to wait for a pullback to buy, but that hasn't happened during the rally. Instead, we would prefer to buy a close above $65 and then use a sell-stop at $59.
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:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.