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What to Expect from Autodesk (ADSK) Stock in Q1 Earnings?

Zacks Equity Research

Autodesk Inc. ADSK is set to report first-quarter fiscal 2018 results on May 18. In the last quarter, the company delivered a negative earnings surprise of 14.29%. Notably, the company had a mixed earnings history in the trailing four quarters, with an average positive surprise of 12.50%.

Let’s see how things are shaping up for this quarter.

Factors to Consider

Autodesk’s business transition from licenses to cloud-based services is expected to benefit it in the long run by boosting its subscriptions and deferred revenues. In the last reported quarter, total subscriptions increased approximately 154,000 from the prior quarter, while new model subscriptions (product, enterprise flexible license, and cloud subscription) increased by 227,000 to $1.09 million.

In fact, cloud subscriptions in the last-reported quarter continued to see solid growth driven by BIM 360.

Autodesk is well positioned to capitalize on the rapid adoption of computer-aided designing and manufacturing through its comprehensive product portfolio. We expect its broad product portfolio to generate new customers in both domestic and overseas markets.

Autodesk, Inc. Price and EPS Surprise

Autodesk, Inc. Price and EPS Surprise | Autodesk, Inc. Quote

Notably, the company’s aggressive acquisition strategy has played a pivotal part in developing its business. Cost cutting initiatives are also a big positive.

We note that Autodesk has outperformed the Zacks Computer – Software industry on a year-to-date basis. The company’s shares rallied 28.8% compared with the industry’s gain of 15.3% during the period.

However, the company’s financials may also be affected by increasing investments in cloud-based infrastructure and marketing initiatives. Foreign exchange fluctuations and competition in the cloud-computing domain from the likes of Amazon.com Inc. AMZN, Microsoft Corp. MSFT and Adobe Systems also remain headwinds.

In the first quarter of fiscal 2018, Autodesk expects revenues in a range of $460 million - $480 million. Non-GAAP loss per share is projected in the range of 21 cents to 27 cents for the same period.

Earnings Whispers

Our proven model does not conclusively show earnings beat for Autodesk this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Autodesk has an Earnings ESP of -11.11% as the Most Accurate estimate is at a loss of 40 cents, while the Zacks Consensus Estimate is pegged at a loss of 36 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Autodesk has a Zacks Rank #3, which when combined with an Earnings ESP of -11.11%, makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here is a company, which you may consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Home Depot, Inc. HD with an Earnings ESP of +0.62% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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