Investors looking for growth possibilities often encounter the difficulty of finding companies with both solid basic business momentum and positive technical chart formations. One technique that merges these views is filtering for stocks showing strong fundamental growth attributes while also presenting technical breakout formations. This two-part analysis method tries to identify companies set for continued earnings growth while timing entries at possible turning points where price momentum might increase. The objective is to locate securities where fundamental strength creates the base for long-term value increase, while technical formations indicate short-term price movement possibility.
AUTODESK INC (NASDAQ:ADSK) appears as a candidate matching this method, showing the traits of a growth stock while offering a technical formation that deserves notice from investors using this combined technique.
Fundamental Growth Profile
The company's fundamental situation shows several positive points matching growth stock standards. AUTODESK INC shows notable financial measurements across important growth and profitability areas:
- Earnings Growth: The company has reached a 24.81% yearly EPS growth rate over recent years, with last year's growth at 14.55%
- Revenue Expansion: Revenue has increased by 13.78% in the last year, keeping a 13.37% average yearly growth path
- Future Expectations: Analysts predict continued strength with estimated EPS growth of 16.72% and revenue growth of 11.95% each year
These growth measurements are supported by outstanding profitability, where AUTODESK INC gets 9 out of 10 in ChartMill's profitability rating. The company holds a gross margin of 90.61%, performing much better than 98.58% of software industry companies, while its return on invested capital of 19.28% is in the top 7% of the sector. For growth investors, these profitability numbers are important as they show the company's capacity to effectively turn revenue into earnings, a main factor for lasting expansion.
Technical Setup Analysis
From a technical viewpoint, AUTODESK INC presents a notable formation even with its overall technical rating of 1 out of 10. The stock displays a setup rating of 8 out of 10, suggesting a period of limited movement within a set range that might come before a price move. The present trading formation shows:
- Consolidation Zone: Prices have been moving between $293.06 and $315.00 over the last month
- Key Resistance: An important resistance area exists between $303.82 and $307.87, created by several trendlines and moving averages
- Support Structure: Multiple support levels are found below present prices, including a main area between $294.85 and $300.19
This technical formation is especially significant for growth investors because breakouts from periods of limited movement often mark the start of new momentum stages. When paired with strong fundamental growth attributes, such technical formations can point to times where market acknowledgment of the company's growth potential might be increasing.
Valuation and Financial Health Context
AUTODESK INC's valuation offers a varied situation that growth investors need to balance against its growth path. The company trades at a P/E ratio of 32.20, which seems high compared to the S&P 500 average of 26.34 but is lower than the software industry average of 44.61. More significantly, the PEG ratio, which includes growth projections, indicates a fair valuation considering the company's estimated earnings growth.
The company's financial health gets 6 out of 10, with some cash availability worries balanced by positive debt management measurements. While current and quick ratios under 1.0 show possible short-term cash limitations, the company holds a sound Altman-Z score of 5.49 and an acceptable debt-to-free-cash-flow ratio of 1.34. For growth investors, average financial health issues might be tolerable when measured against exceptional growth and profitability, assuming the company keeps enough access to funding to support expansion.
Investment Considerations
The mix of AUTODESK INC's fundamental growth situation and technical setup forms a notable proposition for investors using this two-part analysis method. The company's steady revenue and earnings growth, together with sector-leading profitability, give the fundamental reason for growth stock classification. Meanwhile, the technical limited movement formation indicates the stock might be nearing a point where either a move above resistance or a drop below support could decide short-term direction.
Investors should observe that while the fundamental analysis report points out strong growth attributes, the technical analysis report shows the stock has been performing weaker than the wider market lately even while trading in the higher part of its 52-week range. This difference between fundamental strength and technical performance might offer chance if the technical setup ends positively.
For investors wanting to research similar possibilities, other stocks meeting this "Strong Growth Stocks with good Technical Setup Ratings" standard can be located using this screening tool.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions. Past performance is not indicative of future results.
