- If you are wondering whether Autodesk at around US$240 per share still offers good value, it helps to step back from the headlines and look closely at what the valuation metrics are really saying.
- The stock has inched up about 2.7% over the past week, yet remains down about 2.2% over the past month, about 16.2% year to date, and about 18.6% over the past year, while the 3 year return sits at about 21.6%.
- Recent attention on the stock has focused on how these mixed returns line up with Autodesk's long term position in design and engineering software and whether current pricing fairly reflects that role. This backdrop makes it useful to compare different valuation methods rather than relying on a single headline multiple or ratio.
- On Simply Wall St's valuation checks, Autodesk scores 4 out of 6. Next you will see how methods like DCF, P/E and peer comparison line up on price. At the end, a more holistic way to think about what that valuation score really means will be brought together.
Find out why Autodesk's -18.6% return over the last year is lagging behind its peers.
Approach 1: Autodesk Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes projected future cash flows, then discounts them back to today to estimate what the business might be worth right now. It is essentially asking how much a stream of future cash in your hand today could be worth.
For Autodesk, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $2.36b. Analysts supply detailed forecasts for several years, and Simply Wall St then extends these further, with ten year projections that include an estimated free cash flow of $4.79b in 2031, with later years extrapolated from those analyst inputs.
After discounting each of those projected cash flows back to today, the model arrives at an estimated intrinsic value of about $390.56 per share. Against a current share price near $240, this implies the stock screens as roughly 38.5% undervalued on this DCF view.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Autodesk is undervalued by 38.5%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.
Approach 2: Autodesk Price vs Earnings
For a profitable company, the P/E ratio is often a useful yardstick because it links what you pay for each share directly to the earnings that support that share. Investors usually accept a higher P/E when they expect stronger growth or see lower risk, and look for a lower P/E when growth expectations are more modest or risk feels higher.
Autodesk currently trades on a P/E of about 45.1x. That sits above the broader Software industry average of about 28.6x and below the peer group average of about 58.7x, so the stock is priced somewhere between the wider sector and closer peers.
Simply Wall St’s Fair Ratio for Autodesk is 31.8x. This is a proprietary estimate of what a reasonable P/E might be given factors such as earnings growth, industry, profit margins, market cap and specific risks. Because it is tailored to the company, it aims to be more informative than a simple comparison with peers or the industry, which may have very different growth profiles or risk levels. On this Fair Ratio view, Autodesk’s current P/E of 45.1x screens as higher than the level that would be considered aligned with those fundamentals.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Autodesk Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Meet Narratives, a simple way for you to attach a clear story about Autodesk to the numbers you think are reasonable for its future revenue, earnings, margins and fair value, then compare that fair value with the current price to decide whether the stock looks attractive or expensive based on your own view.
On Simply Wall St’s Community page, Narratives are available as an easy tool used by millions of investors. Each Narrative links a company story to a financial forecast and then to a fair value, and those Narratives update automatically as fresh information such as news or earnings is added to the platform, so your story and numbers stay aligned without extra work.
For Autodesk, one investor might lean toward the more optimistic Fair Value around US$413.07 that reflects higher assumed revenue growth, margins and a 42.3x future P/E. Another might prefer the more cautious Fair Value around US$262.20 that assumes tighter margins and a 29.1x future P/E. By choosing which Narrative feels more realistic to you, your decisions start from a story and valuation you actually agree with rather than a single headline metric.
Do you think there's more to the story for Autodesk? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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