Please ensure Javascript is enabled for purposes of website accessibility

Why Autodesk Stock Gained 20% in April

By Demitri Kalogeropoulos - May 11, 2020 at 4:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The design software specialist is expected to show strong first-quarter sales growth when it reports later this month.

What happened

Autodesk (ADSK 1.51%) shares outperformed a surging market last month. The stock gained 20% compared to a 13% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally put the software specialist back in positive territory so far in 2020 while the broader market is down 11% through early May. Shares also trounced the market last year.

A man works with CAD software.

Image source: Getty Images.

So what

Several aggressive moves by the Federal Reserve eased investors' concerns about a potential financial crisis, and that optimism lifted Autodesk's shares along with the rest of the market.

But the company's positive sales momentum and profitable software-as-a-service operating model have also made it a favorite for investors looking to put cash to work in the recent stock market slump. Autodesk's services are completely digital, after all, and aren't likely to be hurt by the shift toward more remote working across major economies in recent weeks. And almost all of its revenue is subscription-based, which should lessen the impact of any quick demand decline. 

Now what

The software giant is due to post fiscal first-quarter results on May 28, and Wall Street is expecting to see significant growth in sales and profits for the period. Look for CEO Andrew Anagnost and his team to discuss billings trends in key markets like Western Europe, China, and the U.S., along with customer satisfaction metrics like the retention rate.

Cash flow will take on more significance as global economic growth has slowed in recent weeks. And this report will be management's first chance to update their broader outlook, which currently calls for sales growth of between 20% and 22% and free cash flow of roughly $1.6 billion -- up from $1.36 billion in 2019 and $310 million in the previous fiscal year.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Autodesk. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Autodesk, Inc. Stock Quote
Autodesk, Inc.
$230.70 (1.51%) $3.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.