The firm upgraded its rating on the software designer and services company based on strong growth, cyclical strength in the end markets and secular tailwinds from upgrade terminations the firm believes will make cloud transitions easier.
TheStreet Ratings team rates AUTODESK INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate AUTODESK INC (ADSK) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, solid stock price performance, 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 analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $183.50 million or 17.93% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.60%.
- Compared to its closing price of one year ago, ADSK's share price has jumped by 27.05%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- Despite currently having a low debt-to-equity ratio of 0.33, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.51 is very high and demonstrates very strong liquidity.
- AUTODESK INC's earnings per share declined by 28.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AUTODESK INC reported lower earnings of $0.99 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $0.99).
- ADSK, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- \You can view the full analysis from the report here: ADSK Ratings Report
STOCKS TO BUY: TheStreet's Stocks Under $10 has identified a handful of stocks that can potentially TRIPLE in the next 12-months.Learn more.