When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Autodesk, Inc. (NASDAQ:ADSK) which saw its share price drive 157% higher over five years. We note the stock price is up 4.2% in the last seven days.
Given that Autodesk only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 5 years Autodesk saw its revenue shrink by 0.003% per year. On the other hand, the share price done the opposite, gaining 21%, compound, each year. It's a good reminder that expectations about the future, not the past history, always impact share prices. Still, this situation makes us a little wary of the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Autodesk is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Autodesk stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Autodesk's TSR for the year was broadly in line with the market average, at 13%. It has to be noted that the recent return falls short of the 21% shareholders have gained each year, over half a decade. Although the share price growth has slowed, the longer term story points to a business well worth watching. Before spending more time on Autodesk it might be wise to click here to see if insiders have been buying or selling shares.
Of course Autodesk may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.