Autodesk, Inc. (ADSK - Free Report) earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an average positive earnings surprise of 36.1%.
With expected long-term earnings per share growth rate of 26% and a market cap of $33.41 billion, it seems to be a stock that investors should keep in their portfolio for now.
Let’s take a look at the factors that have been influencing the company’s performance.
Autodesk is benefiting from increasing subscriptions revenues and robust demand for AutoCAD offerings.
The company is well positioned to capitalize on the rapid adoption of computer-aided designing and manufacturing in both its domestic and overseas markets. We believe that higher demand for its cloud-based products, mobile products and design suites will drive the top line over the long term.
Autodesk’s business transition from perpetual licenses to cloud-based services is expected to benefit it in the long run by boosting its subscriptions and deferred revenues. Also, in order to boost customers to move from maintenance subscriptions to product subscription, management is offering discounts, which is increasing its subscription base.
However, Autodesk’s top-line growth over the last couple of years has been negatively impacted by the ongoing business model transition. The continuing movement from perpetual licenses to cloud-based services, as well as migration of maintenance plan customers to subscription plan offerings, has severely hurt revenues. The trend is expected to continue in the near term.
Nevertheless, a satisfactory revenue growth of 22% in second-quarter fiscal 2019 and a 24.7% expected revenue growth per the Zacks Consensus Estimate in the ongoing quarter justify this Zacks Rank #3 (Hold) stock’s retention in investors’ portfolio.
Stocks to Consider
Some better-ranked stocks in the broader technology sector include Vishay Intertechnology, Inc. (VSH - Free Report) , Paycom Software, Inc. (PAYC - Free Report) and NetApp, Inc. (NTAP - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vishay Electronics, Paycom Software and NetApp have long-term expected EPS growth rate of 9.2%, 25.5% and 14.1%, respectively.
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