Down 13% In 2021, Is Now A Good Time To Scoop Up Autodesk Stock?

Autodesk (ADSK - Get Rating) has dipped 13% since the start of the new year. The stock market has struggled of late, declining as a whole, yet tech stocks such as ADSK have been hit particularly hard.

If you have been patiently waiting on the sidelines, hoping and praying that ADSK declines, now is the opportunity to strike. However, some investors are not exactly uber-bullish on ADSK, primarily because it might still be overpriced despite its recent pullback.

Let’s take a look at whether now is the best possible time to add ADSK to your portfolio or if the better strategy might be to wait until the market settles down and ADSK moves to an even more attractive entry point.

ADSK – While the tech industry was the market’s darling in 2020, results have been mixed so far this year. This is especially true for Autodesk (ADSK). The stock is down so far for the year, but is it a buying opportunity?

The Case for ADSK

ADSK makes software for clients in the digital media, construction, engineering, architecture, manufacturing, product design, and entertainment industries. ADSK revenue is generated by selling subscriptions, cloud services, renewal fees, and enterprise business agreements. ADSK rakes in nearly $4 billion of revenue per year. It is particularly important to note that just under 97% of ADSK’s aggregate revenue stems from subscription and maintenance revenues. The remainder of the company’s revenue stems from licenses.

ADSK is currently priced around $60 below its 52-week high of $321.13. The stock currently has a forward P/E ratio of 50.80. This is a respectable P/E ratio considering ADSK is a tech stock, priced at a level that factors in earnings across years to come.

ADSK has a 15x price to sales multiple. This is a fairly high multiple, especially considering ADSK has topline growth hovering around the 15% mark. However, ADSK’s margins are improving with each earnings cycle, alleviating potential concerns regarding overvaluation.

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