In the latest trading session, Cadence Design Systems (CDNS) closed at $305.43, marking a +1.6% move from the previous day. This change outpaced the S&P 500's 0.78% gain on the day. Meanwhile, the Dow experienced a rise of 0.49%, and the technology-dominated Nasdaq saw an increase of 1.29%.
Shares of the maker of hardware and software products for validating chip designs have appreciated by 11.97% over the course of the past month, outperforming the Computer and Technology sector's loss of 3.59%, and the S&P 500's loss of 1.33%.
Market participants will be closely following the financial results of Cadence Design Systems in its upcoming release. On that day, Cadence Design Systems is projected to report earnings of $1.89 per share, which would represent year-over-year growth of 20.38%. At the same time, our most recent consensus estimate is projecting a revenue of $1.43 billion, reflecting a 15.02% rise from the equivalent quarter last year.
For the full year, the Zacks Consensus Estimates are projecting earnings of $8.11 per share and revenue of $5.98 billion, which would represent changes of +13.59% and +12.9%, respectively, from the prior year.
It's also important for investors to be aware of any recent modifications to analyst estimates for Cadence Design Systems. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable 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, there's been a 0.32% rise in the Zacks Consensus EPS estimate. Cadence Design Systems presently features a Zacks Rank of #3 (Hold).
Digging into valuation, Cadence Design Systems currently has a Forward P/E ratio of 37.06. This denotes a premium relative to the industry average Forward P/E of 17.94.
One should further note that CDNS currently holds a PEG ratio of 2.9. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As the market closed yesterday, the Computer - Software industry was having an average PEG ratio of 1.52.
The Computer - Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 85, positioning it in the top 35% of all 250+ industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
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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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