Autodesk: One To Watch, After It Completes Its Options Review

Autodesk, Inc. (ADSK) reported record quarterly revenues of $509 million, an increase of 17 percent over the first quarter of fiscal 2007. The company, which makes engineering and architectural design software, is like all too many tech companies in that a probe into stock option practices means they don’t know how much they actually earned.

What is known about the results, however, looks pretty good, as analysts were only expecting $500 million in sales. Autodesk also raised estimates for the next two quarters and the full year to levels above the wall street consensus.

Growth indicators look solid:

• Total backlog increased $23 million compared to January 31, 2007.
• Total deferred revenue increased $21 million sequentially. Deferred maintenance revenues from subscription increased $34 million sequentially.
• Unshipped product orders increased by $2 million sequentially to $19 million at April 30, 2007.
• Channel inventory as of April 30, 2007 was below the normal range of three to four weeks.
• DSO decreased to 47 days.

Although I think Ansys (ANSS) has more potential, Autodesk also appears reasonably valued. Its $9.7 billion enterprise value is backed by nearly $400 million in free cash flow, an amount that is nearly double the level of two years ago. After they complete their options review, this one could be a stock to watch.

ADSK 1-yr chart: