Cadence Design Systems (CDNS) closed at $320.30 in the latest trading session, marking a -1.99% move from the prior day. The stock fell short of the S&P 500, which registered a loss of 0.79% for the day. At the same time, the Dow lost 0.94%, and the tech-heavy Nasdaq lost 0.92%.
The maker of hardware and software products for validating chip designs's shares have seen an increase of 10.06% over the last month, surpassing the Computer and Technology sector's gain of 7.88% and the S&P 500's gain of 5.22%.
Analysts and investors alike will be keeping a close eye on the performance of Cadence Design Systems in its upcoming earnings disclosure. In that report, analysts expect Cadence Design Systems to post earnings of $1.57 per share. This would mark year-over-year growth of 22.66%. At the same time, our most recent consensus estimate is projecting a revenue of $1.26 billion, reflecting a 18.8% rise from the equivalent quarter last year.
For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $6.77 per share and a revenue of $5.2 billion, representing changes of +13.4% and +11.99%, respectively, from the prior year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Cadence Design Systems. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.
Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed an unchanged state. At present, Cadence Design Systems boasts a Zacks Rank of #2 (Buy).
From a valuation perspective, Cadence Design Systems is currently exchanging hands at a Forward P/E ratio of 48.26. This signifies a premium in comparison to the average Forward P/E of 27.59 for its industry.
One should further note that CDNS currently holds a PEG ratio of 3.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The average PEG ratio for the Computer - Software industry stood at 2.41 at the close of the market yesterday.
The Computer - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 42, this industry ranks in the top 18% of all industries, numbering over 250.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.
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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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