Stock Analysis

Institutional Support Could Hold the Floodgates for Autodesk (NASDAQ:ADSK)

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After a volatile year that saw Autodesk, Inc. (NASDAQ: ADSK) rally just to fall multiple times immediately, the stock is on the way to its worst session so far.

Rich valuations are becoming the peril of growth stocks, as the market prefers to look toward the future.

See our latest analysis for Autodesk

Earnings results

  • Q3 Non-GAAP EPS: US$1.33 (beat by US$0.07)
  • GAAP EPS: US$0.61 (beat by US$0.07)
  • Revenue: US$1.13b (beat by US$10m)

Other highlights:

  • GAAP operating margin declined from 18% to 17%
  • Total billings – US$1.16b (16% increase)
  • FY 2022 Outlook: Revenue US$4.36b-4.375b vs. consensus US$4.37b)

However, despite the earnings beat, the stock is down over 13%. It seems that the market only looks forward and violently punishes even the smallest deviations in margins and forward guidance for growth companies. The kick-off the last night was undoubtedly in the billings guidance that had downward revision through the year.

First it went from +19%-22% to +18-20% and eventually to +14-16%. Billing revisions are arguably the worst enemy of growth companies, as they raise questions about the performance for the next year.

Who Owns Autodesk?

Autodesk has a market capitalization of US$67b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. In the chart below, we can see that institutional investors have bought into the company.

We can zoom in on the different ownership groups to learn more about Autodesk.

NasdaqGS: ADSK Ownership Breakdown November 24th, 2021

What Does The Institutional Ownership Tell Us About Autodesk?

Institutions typically measure themselves against a benchmark when reporting to their investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Autodesk has institutional investors, and they hold a good portion of its stock. This implies the analysts working for those institutions have looked at the stock, and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a significant share price drop if two large institutional investors try to sell out of stock simultaneously.

So it is worth checking the past earnings trajectory of Autodesk (below).

NasdaqGS: ADSK Earnings and Revenue Growth November 24th, 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Autodesk. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 8.0% of shares outstanding. BlackRock, Inc. is the second-largest shareholder owning 7.9% of common stock, and Loomis, Sayles & Company L.P. holds about 4.2% of the company stock.

The shareholder registry shows that the top 17 shareholders control 51% of the ownership, meaning that no single shareholder has a majority interest in the ownership.

While studying institutional ownership data for a company makes sense, it also makes sense to research analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Autodesk

Insider ownership is positive when it signals leadership is thinking like the actual owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that Autodesk, Inc. insiders own under 1% of the company. It is a huge company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own US$68m worth of shares (at current prices). Arguably recent buying and selling are just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With 7.6% ownership, the general public, mostly comprised of individual investors, is a relatively smaller ownership class in Autodesk. Thus, only a relatively small part of the company is held by retail investors. Since they are only a small group of shareholders in the company, they can do little if their interests are not prioritized.

Next Steps:

Although Autodesk sold off for the third time after the earnings this year, it is worth noting that the price rebounded every time after that happened. While it is evident that institutional investors dominate the ownership list, there is one significant advantage in that situation. They are long-term oriented and therefore patient enough to sit through the short-term turbulence.

Thus, it is valuable to track the ownership changes, especially volume analysis for such stocks, to better gauge the institutional sentiment.

While it is well worth considering the different groups that own a company, other factors are even more important. For instance, we've identified 2 warning signs for Autodesk that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Valuation is complex, but we're helping make it simple.

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Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no position in any of the companies mentioned. This article 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.

Stjepan Kalinic

Stjepan Kalinic

Stjepan is a writer and an analyst covering equity markets. As a former multi-asset analyst, he prefers to look beyond the surface and uncover ideas that might not be on retail investors' radar. You can find his research all over the internet, including Simply Wall St News, Yahoo Finance, Benzinga, Vincent, and Barron's.

About NasdaqGS:ADSK


Autodesk, Inc. provides 3D design, engineering, and entertainment technology solutions worldwide.

Solid track record with reasonable growth potential.