Autodesk Inc. (ADSK) Quarterly Valuation – May 2014

500px-Autodesk_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing 5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Autodesk Inc. (ADSK) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Autodesk, Inc. (Autodesk) is a design software and services company, offering customers business solutions through technology products and services. The Company operates in four operating segments: Platform Solutions and Emerging Business (PSEB), Architecture, Engineering and Construction (AEC), Manufacturing (MFG) and Media and Entertainment (M&E). The Company serves customers in the architecture, engineering and construction; manufacturing, and digital media and entertainment industries. In January 2014, Autodesk Inc completed the acquisition of technology and the development team of In February 2014, Autodesk Inc completed the acquisition of Delcam, one of the suppliers of advanced computer-aided manufacturing (CAM) software.

ADSK Chart

ADSK data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $46.76
MG Value $14.33
MG Opinion Overvalued
Value Based on 3% Growth $14.51
Value Based on 0% Growth $8.51
Market Implied Growth Rate 19.11%
Net Current Asset Value (NCAV) $2.21
PEmg 46.73
Current Ratio 2.65
PB Ratio 4.69

Balance Sheet – 1/31/2014

Current Assets $2,835,000,000
Current Liabilities $1,071,500,000
Total Debt $746,400,000
Total Assets $4,595,000,000
Intangible Assets $1,114,200,000
Total Liabilities $2,333,500,000
Outstanding Shares 226,700,000

Earnings Per Share

2014 $1.00
2013 $1.07
2012 $1.22
2011 $0.91
2010 $0.25
2009 $0.80
2008 $1.47
2007 $1.19
2006 $1.33
2005 $0.90

Earnings Per Share – ModernGraham

2014 $1.00
2013 $0.95
2012 $0.90
2011 $0.81
2010 $0.84
2009 $1.13



Autodesk qualifies for the Enterprising Investor but not the Defensive Investor.  The company fails the Defensive Investor’s requirements due to the lack of consistent dividend payments or sufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor’s only concern is the lack of dividend payments.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and its competitors through a review of Adobe Systems (ADBE) and Apple Inc. (AAPL).  From a valuation side of things, the company appears to be significantly overvalued after growing its EPSmg (normalized earnings) from $0.84 in 2010 to only $1.00 in 2014.  This low level of demonstrated earnings growth does not support the market’s implied estimate of 19.11% earnings growth.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Autodesk (ADSK)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author held a long position in Apple Inc. (AAPL) but did not hold a position in any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

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