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  5. ADSK: Which has the better overall potential return for the next 3 to 5 years and why? [Autodesk Inc.]
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Investment Q&A

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Q: Which has the better overall potential return for the next 3 to 5 years and why?
Asked by Barrie on March 06, 2024
5i Research Answer:

Both are roughly the same size ($50B to $60B market cap), but ADSK is expected to grow its sales and earnings at a faster rate than BNS. Historically, ADSK has grown its sales and earnings faster than BNS, and its total return has also been stronger. It also trades at a more expensive valuation, however, 31X forward earnings vs. BNS at 10X forward earnings, but part of this is to be expected due to the difference in sectors. 

BNS is one of the largest banks in Canada, has largely seen stability over the past several years, and pays a nice yield of 6.3%. Whereas, ADSK provides design technology for engineers, and likely has more competition and is less 'protected' in the same regulatory way that BNS is. 

For future expected return, we would give ADSK the edge today, but BNS has its merits in that it's a large Canadian bank that has been around for a while, and pays a nice dividend yield.