Autodesk shares fell by -4.9% during the day's morning session, and are now trading at a price of $229.24. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Autodesk's Valuation Is in Line With Its Sector Averages:
Autodesk, Inc. engages in the provision of 3D design, engineering, and entertainment technology solutions worldwide. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 30.44 and an average price to book (P/B) ratio of 4.19. In contrast, Autodesk has a trailing 12 month P/E ratio of 43.8 and a P/B ratio of 15.96.
When we divideAutodesk's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.92, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
Wider Gross Margins Than the Industry Average of 63.49%:
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $3,790 | $4,386 | $5,005 | $5,497 | $6,131 | $7,206 |
| Gross Margins | 91% | 90% | 90% | 91% | 91% | 91% |
| Net Margins | 32% | 11% | 16% | 16% | 18% | 16% |
| Net Income (M) | $1,208 | $497 | $823 | $906 | $1,112 | $1,124 |
| Net Interest Expense (M) | -$82 | -$53 | -$43 | $8 | $20 | $25 |
| Depreciation & Amort. (M) | $51 | $52 | $50 | $47 | $43 | $43 |
| Diluted Shares (M) | 222 | 217 | 216 | 217 | 215 | 215 |
| Earnings Per Share | $5.44 | $2.24 | $3.78 | $4.19 | $5.12 | $5.23 |
| EPS Growth | n/a | -58.82% | 68.75% | 10.85% | 22.2% | 2.15% |
| Avg. Price | $220.7 | $292.89 | $210.03 | $243.48 | $295.2 | $240.19 |
| P/E Ratio | 39.98 | 129.6 | 55.13 | 57.56 | 57.1 | 45.49 |
| Free Cash Flow (M) | $1,346 | $1,475 | $2,031 | $1,282 | $1,567 | $2,409 |
| CAPEX (M) | $91 | $56 | $40 | $31 | $40 | $43 |
| EV / EBITDA | 72.6 | 96.47 | 44.16 | 45.38 | 45.37 | 31.42 |
| Total Debt (M) | $2,650 | $2,650 | $2,300 | $2,300 | $2,500 | $2,500 |
| Net Debt / EBITDA | 1.33 | 1.47 | 0.74 | 0.73 | 0.37 | 0.15 |
| Current Ratio | 0.81 | 0.73 | 0.75 | 0.65 | 0.82 | 0.85 |
Autodesk has generally positive cash flows and rapidly growing revenues and decreasing reinvestment in the business. Additionally, the company's financial statements display wider gross margins than its peer group and healthy leverage levels. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.85. Finally, we note that Autodesk has flat EPS growth.
