Stock Market Analysis

Better Buy: Adobe Or Autodesk

In the world above the clouds, which of these two design and tech companies are the best bet for an investor with an eye on the future of work?

Digitization is on the rise and so too are the cloud companies. In the market up-turn, these companies are top-competitors. Adobe Systems (NASDAQ: ADBE) is often used by the creatives whilst Autodesk (NASDAQ: ADSK) is preferred in the technical industry. 

In a post-coronavirus world, the market will look for new and innovative ways to make working from home easier. This means easier-to-use software and reliable cloud networks. So which of these two companies can provide for the average joe, and which is a better investment?

Bull and Bear case for Adobe

Adobe has seen some solid growth over the last decade; in which time its stock has grown over 1,200% and it is highlighted as a long-term stable stock for earnings growth and price performance. Adobe has a strong bull case with a compounded 22% annual revenue growth and 63% earnings growth over the last five years. Cloud-market ETFs such as First Trust Cloud Computing ETF (NASDAQ: SKYY) and the IGV ETF (BATS: IGV) cite Adobe as a stock to watch. For these reasons and more Adobe is seen as a top stock to invest in this June.

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In the bear corner, investors looking for a dividend stock will not find one with this company. Although mitigated by strong EPS growth, lack of a dividend could send a message about its future growth potential. In this case, however, I feel that the Photoshop maker is instead redirecting those earnings into innovation and acquisitions such as the e-commerce tech firm Magento and the B2B marketing platform Marketo in 2018. These are risky moves as concerns about data security and privacy are rising and any mistake could be costly for Adobe. 

In addition, Adobe’s top spot in the computer software-desktop industry is being chased by some big competitors. Microsoft (NASDAQ: MSFT) follows close behind as well as competition from Salesforce (NYSE: CRM), SAP (ETR: SAP), and even Shopify (NYSE: SHOP). The digital world is growing, yet the range of services Adobe provides allows many budding freelance marketers to showcase their creativity in a variety of ways. 

Bull and Bear case for Autodesk

Autodesk stock had an impressive 2019 with a 43% gain in comparison to the S&P 500’s (NYSEARCA: VOO) 29%. Its revenue increased by 22% and the EPS sat at $2.79. For fiscal 2021 analysts have predicted a profit increase of 55% and 40% for 2022. This comes after  8.7% average growth since 2015 when Autodesk transitioned to a subscription-based service. Although helping in the long term, only last year did Autodesk begin to see an increase in revenue due to this pivot. Growth continued into 2020 with Q1 results showing a 20% revenue increase year-on-year.

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Going forward, despite the analysts’ forecast looking so positive, there is still relative uncertainty as to how Q2 earnings will have been hit by the coronavirus. Many companies will have tightened their own belts and thus stopped monthly subscriptions such as the services provided by Autodesk or even Adobe. However, Autodesk can cost between $185 – $335 per month for a single user, depending on what is included in the package. This would likely see the technical design software company dropped before Adobe, which has a lower price tag of $30 per month

That being said, I am reaching slightly for this bear case. Autodesk has strong and optimistic numbers moving into the future, and it has a very strong retention rate; between 110% and 120% in fiscal 2020 alone. Simply put, customers like Autodesk, and once they join, they tend not to leave. They are a competitor to Adobe, being a subscription-based cloud service, yet Autodesk hones in on more technical features preferred by engineers, architects, and other construction industry professions. This gives it the space to grow in its own direction in this heavily expanding digital economy, whilst also competing for overall market share. 

So which is the better buy? 

There is no real case for a ‘better buy’ here. Both companies are showing strength in the market recovery after the COVID-19-induced downturn. Adobe has the name, the years of experience under its belt, and a nose for acquisition and expansion of products. Autodesk, on the other hand, shows signs of continued growth, the loyalty of the tech industry and its subscription transition is now paying off with optimistic forecasts. 

There’s a strong bull case for both, and in the end, it might just fall down to which service you prefer as a whole, as is the case for those who use these services to make working from home easier.


MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.

Poppy Murray
Poppy Murray
Poppy is a contributing writer to MyWallSt. Poppy likes companies that go the extra mile. Her favorite stock is Amazon because she is fond of its innovation, variety, and creative solutions to sustainability.