What Lies In Store For Autodesk (ADSK) In Q2 Earnings?

Autodesk, Inc. (NASDAQ:ADSK) is set to report second-quarter fiscal 2017 results on Aug 25. In the last quarter, the company delivered in-line earnings. The company has delivered an average positive earnings surprise of 23.22% in the trailing four quarters.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Autodesk’s business transition is adding to its subscriptions and deferred revenues. The company has already started seeing decent growth in new subscriptions. In the first quarter, though the transition was underway, new subscriptions represented more than half of the total subscription additions. Also, the company remains focused on undertaking more cost-cutting initiatives as a part of its business transition.

In Jun 2016, the company unveiled a number of updates to its Forge platform while increasing its investment in the same. This apart, Autodesk collaborated with Trimble in the quarter in order to accelerate interoperability to help clients save time and money.

However, in the near term, the company’s financials may also be affected by increasing investments in cloud-based infrastructure and marketing initiatives. This is a concern as the company is yet to report profits. The other headwinds are foreign exchange fluctuations and competition in the cloud-computing domain from the likes of Amazon.com Inc. (NASDAQ:AMZN) , Microsoft Corp. (NASDAQ:MSFT) and Adobe Systems (NASDAQ:ADBE).

For the second quarter of fiscal 2017, Autodesk expects revenues in the range of $500 million - $520 million. Non-GAAP loss per share (excluding stock-based compensation expense and amortization of acquisition-related intangibles) is expected in the range of 11 cents – 18 cents for the quarter.

Earnings Whispers

Our proven model does not conclusively show that Autodesk is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Autodesk’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 30 cents.

Zacks Rank: Autodesk has a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stock to Consider

Here is a company, which you may consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Best Buy Co., Inc. (NYSE:BBY) , with an Earnings ESP of + 4.76% and a Zacks Rank #3.

AUTODESK INC Price, Consensus and EPS Surprise

AUTODESK INC Price, Consensus and EPS Surprise | AUTODESK INC Quote