Autodesk (ADSK) Falls Further As It's Water-Logged And Getting Wetter

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 "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) 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 $108.0 million.
  • ADSK has traded 3.6 million shares today.
  • ADSK traded in a range 281.4% of the normal price range with a price range of $3.19.
  • ADSK traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ADSK:

Autodesk, Inc. operates as a design software and services company worldwide. ADSK has a PE ratio of 63.4. Currently there are 9 analysts that rate Autodesk a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Autodesk has been 1.8 million shares per day over the past 30 days. Autodesk has a market cap of $12.7 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.90 and a short float of 1.2% with 1.70 days to cover. Shares are up 10.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Autodesk as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. 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 ratings report include:
  • Compared to its closing price of one year ago, ADSK's share price has jumped by 53.71%, exceeding the performance of the broader market during that same time frame. Although ADSK had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 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. Despite the fact that ADSK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.18 is high and demonstrates strong liquidity.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, AUTODESK INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $218.70 million or 2.40% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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

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