Why Autodesk Shares Surged

Why Autodesk Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of design software company Autodesk popped 12% today after its quarterly results easily topped Wall Street expectations.

So what: The stock has been sluggish in 2013 on weak demand for its computer-aided design software, but today's Q2 beat -- adjusted EPS of $0.45 versus the consensus of $0.42 -- is prompting analysts to raise their estimates a bit. Of course, revenue still slipped 1.2% while operating margins declined 100 basis points over the year-ago period, suggesting that Autodesk's competitive position continues to weaken.

Management now sees Q3 adjusted EPS of $0.36-$0.40 on revenue of $540 million-$555 million, versus Wall Street's view of $0.50 and $580 million. "The challenging dynamics within some of the end-markets that we serve has led us to adjust our growth assumptions," said CFO Mark Hawkins. "While the near-term revenue target is lower, we remain diligent about managing our spend while making essential investments to drive growth." With the stock hitting a new 52-week high today and trading at a forward P/E around 20, however, I'd wait for a wider margin of safety before buying into that growth.

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The article Why Autodesk Shares Surged originally appeared on Fool.com.

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