$ADSK Deep Dive
Analysts are expecting Autodesk to grow revenues to $7.29 billion by fiscal 2026, CAGR of 13.5%. Expectations seem reasonable given that management targets double digit revenue growth up to FY’26. Management guidance for non-GAAP operating margin in FY’23 is 37% with its mid-term goal (FY’24 to FY’26) in the range of 38%-40%. Assuming that non-GAAP operating margin for FY’26 is 40% and deducting the share-based compensation of 11.4% (three-year average), the EBITDA margin for fiscal 2026 is 28.6%. The resulting EBITDA margin of 28.6% appears reasonable taking into consideration the current EBITDA margin of its peers (Dassault, Nemetschek and PTC).
Assigning an EV/EBITDA multiple of 25 to the resulting EBITDA of $2.08 billion implies an Enterprise Value of $52.1 billion in FY’2026 and an IRR of 4.7% based on the current share price, ignoring any buyback yield.
There is a lot to like about Autodesk, however in our opinion the current share price does not provide potential for outsized returns. We will not be buyers here, but we will follow the business closely and we might initiate a position if there is further drawdown from current levels. We understand that the share price might go higher from here and we might miss a potential compounder, however we believe that the current price does not provide sufficient margin of safety.
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