Is Autodesk Priced Fairly After a 3% Weekly Gain and Shifting Tech Sentiment?

If you are weighing your next move with Autodesk stock, you are definitely not alone. This is one of those companies that keeps popping up in investor conversations, whether it is on the back of innovation buzz or the ups and downs of its share price. Over the last week, Autodesk managed a tidy 3.0% rise, hinting that sentiment is warming a bit after a bumpy recent stretch. Looking back further, the stock is up 6.7% year-to-date and 9.4% over the last year. These are respectable gains, though perhaps a little underwhelming given the brand’s reputation for steady growth in design and engineering tech.

Long-term holders are still ahead, with Autodesk having delivered a 44.6% return over three years and climbing a further 32.8% in five years. That said, these moves have not all been smooth. The last thirty days saw a slip of -3.3%, partly reflecting a broader tech sector pullback and a few industry headlines around shifts in software adoption cycles and new regulatory concerns. While these bits of news have not upended Autodesk’s market position, they have fueled a debate about the company’s valuation, especially with fast-changing demand dynamics in the digital design space.

So, where does that leave Autodesk on the value front? According to one common valuation framework, the company is currently undervalued in just 1 out of 6 key checks. This is a signal that its price tag might be a bit steeper than some would hope. But before you decide if it is time to buy, sell, or hold, let’s unpack what each valuation approach actually tells us, and why the standard methods may not tell the full story. Stick around for a smarter, more nuanced perspective at the end.

Autodesk scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Autodesk Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s true value by projecting its future cash flows and discounting them to today’s dollars. The basic idea is to ask how much all the cash that Autodesk will generate in years to come is worth to investors right now.

Currently, Autodesk generates Free Cash Flow of approximately $1.85 billion. Analysts forecast that this number will continue to climb, reaching a projected $3.0 billion by 2028. Looking further out, projections extrapolated by Simply Wall St extend for a full decade and show expected Free Cash Flows topping $4.7 billion by 2035. These estimates highlight consistent growth in Autodesk’s ability to generate cash.

Using the 2 Stage Free Cash Flow to Equity model, Autodesk’s intrinsic value comes out to roughly $293.76 per share. However, with the current share price trading about 6.5% above this estimate, the model implies Autodesk is just slightly overvalued at the moment.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Autodesk.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Autodesk's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Autodesk Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a popular valuation tool for profitable companies like Autodesk, as it captures how much investors are willing to pay today for a dollar of earnings. It is especially relevant when a company’s business model reliably generates profits, providing a window into market sentiment and growth prospects.

The “right” PE ratio is not one-size-fits-all. It depends on growth expectations, the stability of those profits, and risk factors surrounding the business. Higher growth companies often command a loftier PE, while riskier or more volatile firms warrant a discount. In Autodesk’s case, its current PE stands at 63.8x. This is well above the software industry average of 33.3x, but still below the peer group average of 77.7x.

Simply Wall St’s proprietary “Fair Ratio” model blends Autodesk’s specific earnings growth projections, risk profile, profit margins, and market size to arrive at a fair PE of 42.6x. Unlike a straight comparison with broad industry peers, this approach delivers a more tailored benchmark. It weights what truly matters to Autodesk’s future returns rather than just averaging out the competition.

With Autodesk’s actual PE ratio significantly higher than its calculated Fair Ratio (63.8x vs 42.6x), this method suggests the stock is moderately overvalued relative to its underlying fundamentals and growth profile.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Autodesk Narrative

Earlier, we alluded to an even better way to understand valuation, so let’s introduce you to Narratives, an investment tool that goes beyond the numbers by connecting a company’s story directly to its forecast and estimated fair value.

In simple terms, a Narrative is your perspective on what will drive Autodesk’s future, such as growth opportunities, risks, or changing industry dynamics. With Narratives, you tell your story about what you believe regarding Autodesk’s revenue, margins, or market trends, and see how those assumptions turn into detailed financial forecasts and a specific fair value for the shares.

Narratives are at the core of the Simply Wall St Community page, making this advanced approach accessible to every investor. By comparing your Narrative-driven fair value to today’s share price, you can quickly see whether Autodesk looks overvalued or undervalued based on your unique view, not just a standard model.

Best of all, Narratives update automatically as new company news, analyst forecasts, or earnings numbers are released, so your investment thesis stays current. For example, one investor might forecast strong AI-driven growth for Autodesk and arrive at a $430 price target, while another more cautious investor might focus on margin risks and set their fair value closer to $271. Narratives empower you to decide for yourself, guided not just by numbers but by your own informed expectations.

Do you think there's more to the story for Autodesk? Create your own Narrative to let the Community know!

This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.

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