Autodesk Inc. (ADSK) is scheduled to announce its first quarter 2012 results on May 19, 2011. We do not see any major variation in analysts’ estimates in the run-up to the earnings report.
Prior Quarter Recap
Autodesk reported fourth quarter 2011 earnings of 27 cents per share, in line with the Zacks Consensus Estimate. Earnings per share (EPS), including stock-based compensation but excluding one-time charges, increased 22.7% year over year, primarily driven by strong revenue growth.
Revenues increased 16.0% year over year to $528.0 million in the fourth quarter. This was above the Zacks Consensus Estimate of $515.0 million, as well as management’s guided range of $500.0 million to $520.0 million. The company witnessed a rebound in demand for its software solutions in fiscal 2011.
The year-over-year growth was driven by higher license and other segment revenues.
Current Quarter Expectations
For the first quarter of 2012, Autodesk expects revenues in the range of $510.0 million to $525.0 million. As per the Zacks Consensus, Autodesk is estimated to earn revenues of $522.0 million.
GAAP EPS is expected in the range of 21 cents to 24 cents. Non-GAAP EPS is expected in the 34 cents to 37 cents range for the quarter. The Zacks Consensus Estimate is currently pegged at 31 cents per share for the first quarter of 2012, below the guided range.
For fiscal 2012, Autodesk expects revenue to increase 10.0% year over year. Non-GAAP operating margin is expected to increase 200 basis points on a year-over-year basis. However, the company did not provide any EPS guidance for the full year. The current Zacks Consensus Estimate is pegged at $1.40 per share for fiscal 2012.
The outlook provided by the company includes the impact of two acquisitions (Scaleform Corp and Blue Ridge Numerics), which were closed during the first quarter of 2012. However, the Blue Ridge Numerics acquisition is not expected to impact first quarter results, so the guidance remains unchanged following the announcement.
Estimate Revision Trend
For the current quarter, out of the seven analysts covering the stock, only one analyst raised estimates while none moved in the opposite direction over the last thirty days.
For fiscal 2012, three analysts raised their estimates in the last thirty days, one of which was made in the last seven days. Hence, the EPS estimate inched up from $1.39 to $1.40.
The analysts believe that the company is well positioned to benefit from an improving macro environment and fundamental improvements in the business, which is evident from a recovery in new license sales that would occur in conjunction with global recovery.
The analysts also believe Autodesk is gaining market share and its presence in the emerging markets will drive top-line and bottom-line growth going forward.
Autodesk posted a positive average earnings surprise of 43.75% in the trailing four quarters, implying that the company either beat or was in line with the Zacks Consensus Estimate over the same period. The company is also expected to post another positive surprise in the next quarter.
In our view, the company’s improvements and innovations in 3D design technology and product portfolio provides Autodesk a competitive edge. These innovations enable Autodesk to stay ahead of competitors like Adobe Systems Inc. (ADBE), Parametric Technology Corp. (PMTC) and Avid Technology Inc. (AVID).
Over the long term, we remain optimistic on the stock and have an Outperform recommendation, given positives such as Autodesk’s operating margin leverage and strong revenues, stability in its end markets, the increased demand for 3D products, expanding market share, a diversified product pipeline, cost control and strategic acquisitions. However, foreign exchange fluctuations remain a headwind.
Currently, Autodesk has a Zacks #2 Rank, which translates into a short-term (1-3 months) Buy rating.