Adobe Systems (NASDAQ: ADBE) and Autodesk (NASDAQ:ADSK) are both large-cap application software companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, profitability, earnings, institutional ownership and dividends.

Profitability

This table compares Adobe Systems and Autodesk’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Adobe Systems 23.06% 21.40% 12.51%
Autodesk -30.01% -60.14% -8.55%

Volatility and Risk

Adobe Systems has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, Autodesk has a beta of 1.98, suggesting that its stock price is 98% more volatile than the S&P 500.

Earnings & Valuation

This table compares Adobe Systems and Autodesk’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Adobe Systems $5.85 billion 15.31 $1.17 billion $3.18 57.19
Autodesk $2.03 billion 13.45 -$582.10 million ($2.66) -46.86

Adobe Systems has higher revenue and earnings than Autodesk. Autodesk is trading at a lower price-to-earnings ratio than Adobe Systems, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Adobe Systems and Autodesk, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Adobe Systems 0 5 25 0 2.83
Autodesk 0 2 19 0 2.90

Adobe Systems currently has a consensus price target of $172.13, suggesting a potential downside of 5.34%. Autodesk has a consensus price target of $123.78, suggesting a potential downside of 0.69%. Given Autodesk’s stronger consensus rating and higher probable upside, analysts plainly believe Autodesk is more favorable than Adobe Systems.

Institutional & Insider Ownership

87.5% of Adobe Systems shares are owned by institutional investors. Comparatively, 94.6% of Autodesk shares are owned by institutional investors. 0.4% of Adobe Systems shares are owned by company insiders. Comparatively, 6.1% of Autodesk shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Adobe Systems beats Autodesk on 8 of the 13 factors compared between the two stocks.

About Adobe Systems

Adobe Systems Incorporated is a software company. The Company offers products and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and experiences. It operates through three segments: Digital Media, Digital Marketing, and Print and Publishing. Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses and enterprises to create, publish, promote and monetize their digital content. Its Digital Marketing segment provides solutions and services for how digital advertising and marketing are created, managed, executed, measured and optimized. Its Print and Publishing segment addresses market opportunities ranging from the diverse authoring and publishing needs of technical and business publishing to its legacy type and original equipment manufacturer (OEM) printing businesses.

About Autodesk

Autodesk, Inc. is a design software and services company, offering customers productive business solutions through technology products and services. The Company’s segments include Architecture, Engineering and Construction (AEC), Platform Solutions and Emerging Business (PSEB), Manufacturing (MFG), and Media and Entertainment (M&E). The Company serves customers in the architecture, engineering and construction; product design and manufacturing; and digital media and entertainment industries. The Company’s product development and manufacturing software provides manufacturers in automotive, transportation, industrial machinery, consumer products and building products with digital engineering solutions. The Company’s product offerings include, AutoCAD, AutoCAD LT, Industry Collections, 3ds Max, Maya, Revit, Inventor, AutoCAD Civil three dimensional (3D), CAM Solutions, Fusion 360, BIM 360 and Shotgun.

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