Will Autodesk (ADSK) Miss Estimates This Earnings Season? - Analyst Blog
Autodesk, Inc. (ADSK) is set to report fourth-quarter fiscal 2015 results on Feb 26. In the last quarter, the company delivered a positive earnings surprise of 9.09%. The company has delivered positive earnings surprises in the last four quarters, with an average beat of 20.90%. Let’s see how things are shaping up for this announcement.
Factors to Consider
We remain positive on Autodesk’s long-term growth prospects as it is well-positioned to capitalize on the rapid adoption of computer-aided designing and manufacturing through its comprehensive product portfolio. We expect the company to record customer growth in both domestic as well as overseas markets in the fourth quarter on the back of its product portfolio.
Moreover, the increase in construction and manufacturing activities in the emerging markets present growth opportunities, going ahead. Additionally, low channel inventory, increasing efficiencies through its channel partner framework, simplified upgrade pricing mechanism and electronic software delivery will positively affect the to-be-reported quarter results.
However, Autodesk’s uneven top-line growth in the recent past increased its dependence on cost saving programs to boost earnings. Although restructuring programs realign costs, their success often depends on execution. We believe that there is a certain limit up to which costs can be curtailed and therefore, the company should invest more in organic growth, going forward.
Additionally, foreign exchange fluctuations, increasing exposure to Europe and competition from Adobe Systems Inc. (ADBE) are likely to hamper the fourth-quarter results. Also, customer concentration poses significant challenges and keeps us on the sidelines.
Earnings Whispers
Our proven model does not conclusively show that Autodesk is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at earnings per share of 13 cents. Hence, the difference is of 0.00%.
Zacks Rank: Autodesk’s Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Veeva Systems Inc. (VEEV), with an Earnings ESP of +12.50% and a Zacks Rank #3 (Hold).
Tuniu Corporation (TOUR), with an Earnings ESP of +4.88% and a Zacks Rank #3.
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AUTODESK INC (ADSK): Free Stock Analysis Report
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TUNIU CORP-ADR (TOUR): Free Stock Analysis Report
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