FOR IMMEDIATE RELEASE

Autodesk (ADSK) Stock Dips While Market Gains: Key Facts

NEW YORK – Autodesk, Inc. (NASDAQ: ADSK) shares registered a notable decline in the latest trading session, closing down 1.56% at $268.09. The move placed the design software specialist in stark contrast to the broader market, which saw the S&P 500 post a daily gain of 0.41% and the tech-centric Nasdaq Composite add 0.91%. The Dow Jones Industrial Average was the outlier among major indices, shedding 0.83%.

This single-day underperformance is not an isolated event but rather extends a challenging trend for the company's stock. The dip continues a period of significant lag, where Autodesk's shares have fallen behind key benchmarks, raising questions among investors just as the company approaches its next critical earnings announcement.

A Contrarian Move in a Mixed Market

Autodesk's Tuesday session stood out for its divergence from the technology sector's broader momentum. While many tech stocks rallied, contributing to the Nasdaq's solid gain, ADSK moved in the opposite direction. This performance suggests that company-specific factors, rather than sector-wide headwinds, are currently influencing investor sentiment.

The stock's recent trajectory paints a clearer picture of this pressure. Prior to today's trading, Autodesk had already experienced a substantial pullback.

• Recent Performance: Over the past month, shares of the design software company had lost 9.59%.
• Market Comparison: During the same period, the S&P 500 achieved a gain of 0.38%, and the wider Computer and Technology sector, to which Autodesk belongs, saw an increase of 0.49%.

This extended underperformance highlights a growing disconnect between Autodesk's stock price and the positive trends in its sector and the market at large.

Investor Focus Shifts to Upcoming Earnings

With the recent stock weakness as a backdrop, all eyes are now turning to Autodesk's forthcoming quarterly earnings report. The release will be a pivotal moment, offering a chance for the company's fundamental performance to either validate or challenge the market's recent skepticism. Current analyst consensus points toward a period of robust growth.

Robust Growth on the Horizon

Projections for both the upcoming quarter and the full fiscal year suggest significant year-over-year expansion in both revenue and profitability.

• Quarterly EPS Forecast: The consensus earnings per share (EPS) estimate for the quarter is $2.63. This figure would represent a 14.85% increase from the same quarter in the prior year.
• Quarterly Revenue Forecast: Analysts anticipate revenues of $1.91 billion, indicating a substantial 16.52% jump compared to the year-ago quarter.
• Full-Year EPS Outlook: Looking at the entire fiscal year, the Zacks Consensus Estimate for earnings stands at $10.21 per share, which would mark a 20.54% improvement over last year.
• Full-Year Revenue Projections: Full-year revenue is projected to reach $7.16 billion, a year-over-year increase of 16.76%.

These strong growth forecasts present a bullish fundamental case that appears, at least for now, at odds with the stock's recent price action.

Decoding Analyst Sentiments and Ratings

In financial markets, shifts in analyst estimates are closely watched as they often reflect evolving short-term business dynamics and profitability outlooks. Positive revisions can signal growing confidence in a company's operational health.

The Zacks Rank: A Signal of Strength

To quantify the impact of these estimate changes, many investors turn to proprietary models like the Zacks Rank. This system provides a rating from #1 (Strong Buy) to #5 (Strong Sell) and has a notable, independently audited history of performance.

• Current Rating: Autodesk currently holds a Zacks Rank #2 (Buy), suggesting that based on estimate trends, the stock is expected to outperform the market over the next one to three months.
• Rating System: The system is designed to identify companies with positive earnings estimate revisions. Historically, stocks earning a Zacks Rank #1 have generated an average annual return of +25% since 1988.
• Estimate Stability: It is important to note that over the last 30 days, the Zacks Consensus EPS estimate for Autodesk has remained unchanged. This indicates that while the overall outlook is positive, there has not been a recent wave of upward revisions driving the "Buy" rating.

A Premium Valuation Under Scrutiny

While the growth story and analyst ratings appear favorable, a closer look at Autodesk's valuation reveals that the stock is trading at a premium compared to its peers. This is a critical factor for investors weighing the stock's potential for future appreciation.

Price-to-Earnings (P/E) Comparison

The Forward Price-to-Earnings (P/E) ratio, which uses future earnings estimates, is a common metric for gauging valuation.

• Autodesk's Forward P/E: The company is currently trading at a Forward P/E of 26.67.
• Industry Average: Its industry peers sport an average Forward P/E of 24.04.
• Analysis: This differential indicates that investors are paying a higher price for each dollar of Autodesk's expected future earnings compared to the industry average.

Factoring in Growth with the PEG Ratio

To add further context, the Price/Earnings-to-Growth (PEG) ratio adjusts the P/E for the company's expected earnings growth rate. A PEG ratio around 1.0 is often considered to represent a fair valuation.

• Autodesk's PEG Ratio: ADSK currently has a PEG ratio of 1.57.
• Industry Benchmark: The Internet - Software industry, to which Autodesk belongs, had an average PEG ratio of 1.42 at the close of yesterday's trading.
• Interpretation: Similar to the P/E ratio, the PEG ratio suggests Autodesk is trading at a premium relative to its industry, even when its strong growth prospects are taken into account.

The Bottom Line: What's Next for ADSK Investors?

The current situation for Autodesk presents a classic conflict for investors. On one hand, the company's stock has demonstrated clear weakness, underperforming its sector and the broader market amid concerns over its premium valuation.

On the other hand, the fundamental outlook remains strong, with analysts forecasting double-digit earnings and revenue growth. This is further supported by a "Buy" rating from the Zacks Rank system and the fact that Autodesk operates within a healthy industry, which ranks in the top 32% of over 250 industries tracked by Zacks.

The upcoming earnings release will serve as the ultimate arbiter. Investors will be scrutinizing the report not just for confirmation of the projected growth but also for management's forward-looking guidance. The key question is whether the company's performance and outlook can justify its premium valuation and reverse the recent stock slide. A strong beat and raise could reignite investor confidence, while any sign of weakness could give bears further ammunition.