Cadence Design Systems (CDNS) closed at $351.52 in the latest trading session, marking a +2.34% move from the prior day. This move outpaced the S&P 500's daily gain of 0.47%. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, added 0.94%.
The maker of hardware and software products for validating chip designs's stock has dropped by 1.83% in the past month, falling short of the Computer and Technology sector's gain of 3.88% and the S&P 500's gain of 2.32%.
The investment community will be paying close attention to the earnings performance of Cadence Design Systems in its upcoming release. On that day, Cadence Design Systems is projected to report earnings of $1.79 per share, which would represent year-over-year growth of 9.15%. Our most recent consensus estimate is calling for quarterly revenue of $1.32 billion, up 8.96% from the year-ago period.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $6.91 per share and revenue of $5.25 billion, indicating changes of +15.75% and +13.07%, respectively, compared to the previous year.
Investors might also notice recent changes to analyst estimates for Cadence Design Systems. Such recent modifications usually signify the changing landscape of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.
The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.03% higher. Cadence Design Systems presently features a Zacks Rank of #3 (Hold).
Looking at its valuation, Cadence Design Systems is holding a Forward P/E ratio of 49.74. This signifies a premium in comparison to the average Forward P/E of 26.4 for its industry.
We can also see that CDNS currently has a PEG ratio of 3.57. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. Computer - Software stocks are, on average, holding a PEG ratio of 2.05 based on yesterday's closing prices.
The Computer - Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 95, positioning it in the top 39% of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
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Cadence Design Systems, Inc. (CDNS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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