Autodesk Earnings Report — Is It Worth Your Money?

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Autodesk, Inc. is the company behind several software products used in architecture, engineering construction, manufacturing, genetic engineering and media. Autodesk, Inc. (NASDAQ: ADSK) is expected to report earnings on August 23, 2018 after the closing bell. As you probably already know, earnings reports can move the share price by a lot and, therefore, constitute lucrative trading opportunities you can use to your advantage.

Performance indicators

52 Week High-Low $142.94 – $101.55
Dividend / Div. Yld $0.00 / 0.00%
EV/EBITDA Annual -74.02
(F1) EPS Est 4 week change -7.14%
Forward PE 146.54

The consensus EPS forecast for the quarter is $-0.06. The reported EPS for the same quarter last year was $-0.38. The company last issued its quarterly earnings report on May 24. Following the announcement of lower than expected earnings, the stock price has decreased from almost $139 to $129 over the course of only 5 days. What should you, as a trader, expect from the company in the coming days?
Rated ‘Hold’ by Zacks, Autodesk is an ambiguous long-term investment, which doesn’t necessarily mean that ADSK shares cannot be traded successfully in the short run. Autodesk has reported higher than expected earnings per share (EPS) for 14 times in a row and is quite likely to do so again tomorrow. EPS is an important indicator of the company’s performance, yet it doesn’t always mean that higher than expected EPS will translate into a price increase.

According to experts, the company will report lower than expected EPS (source: earningswhispers.com)

Despite the impressive growth cycle, that has lasted for 2 years, there are several risks the company is facing right now. Autodesk is facing an enormous product concentration risk, as only two products (AutoCAD и AutoCAD LT) make up a considerable portion of its revenue. Should one of its competitors make a sudden breakthrough, the company will find itself in a much tougher financial position. The same applies to the distribution network that Autodesk maintains: the lion’s share of its revenue comes from a very limited number of distributors.
Company’s earnings growth is mostly fueled by its cost-saving initiatives. And while the latter can be a valuable addition to the overall profitability, cost-effectiveness should not normally be the prime source of development. As some experts put it, sales volume is the only source of real growth. A trailing 12-month P/S ratio of 13.2 compares unfavorably to the industry average. Which means investors will be less likely to trust the company with their money.
The ADSK stock deprecited in the after-hours earlier today

In today’s after-hours trading the ADSK stock has lost over $2, moved by a sudden decrease in expected EPS. The company has a lot of problems it has to address. Otherwise, it may lose another portion of its value following the report release. Earnings reports are not only about figures, they are also about what the company management is about to do in the future. Unless there is a solid plan, presented by the top management of Autodesk, the company can be expected to depreciate. As of now, the forecast is neutral to negative.
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