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Cadence (CDNS) Gains From Healthy Consumer Demand Trends
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Cadence Design Systems, Inc (CDNS - Free Report) top-line performance is gaining from solid demand for its diversified product portfolio.
Based in San Jose, CA, Cadence offers products and tools that help customers to design electronic products. Its core electronic design automation software and services enable engineers to develop different types of ICs.
The company is focused on providing end-to-end solutions, which rapidly reduces the time required to introduce a semiconductor product in the market. It is experiencing strong demand for its software – particularly verification and digital design products – from customers providing datacenter servers, networking products and smartphones that continues to invest in new design concepts and projects.
Management noted that customers are significantly increasing their R&D budget in Artificial Intelligence (AI)-driven automation, which, in turn, is benefiting CDNS. Most of the generational trends like 5G, hyperscale computing and autonomous driving are being reinforced by the use of Generative AI. This is accelerating chip design activity and thereby creating plenty of business prospects for the company, added Cadence.
Frequent product launches are expected to help CDNS sustain top-line growth. In 2022, it introduced 9 new products, including LPDDR5X memory interface IP, Certus Closure Solution, Cadence Joint Enterprise Data and AI Platform, Verisium AI-Driven Verification Platform and more.
Among existing products, the company’s Palladium and Protium platform is gaining traction among clients in the AI, hyperscale computing and automotive segments. CDNS won 14 new clients and 45 repeat orders in the second quarter of 2023 for Palladium and Protium (especially Z2 and X2) platforms. Cadence Cerebrus AI-driven solution witnessed accelerating momentum and was deployed by several customers.
Moreover, a strong cash position bodes well as it can help CDNS to pursue strategic acquisitions and other investments in growth initiatives. Cadence had cash and cash equivalents of approximately $874 million. Long-term debt was $648.6 million as of Jun 30, 2023. In the second quarter, it generated operating cash flow of $414 million. Free cash flow was $394 million. Strong cash flows help Cadence to continue shareholder-friendly initiatives.
The company repurchased shares worth approximately $265 million in the second quarter. In 2022, it repurchased shares worth $1.05 billion. Management hints at a share buyback program worth approximately $125 million in the third quarter of 2023.
However, higher costs related to R&D are likely to dent margins in the near term. Stiff competition and volatile macroeconomic conditions continue to be concerns.
A Look at Estimates
Cadence’s earnings per share are expected to climb 19.2% and 12.6% on a year-over-year basis to $5.09 and $5.72 in 2023 and 2024, respectively. The Zacks Consensus Estimate for 2023 and 2024 earnings has improved 1.8% and 2.1%, respectively, in the past 60 days.
Revenues for 2023 and 2024 are projected to rise 14.5% and 10.1% to $4.08 billion and $4.49 billion, respectively.
Zacks Rank & Share Price Movement
CDNS currently carries a Zacks Rank #3 (Hold).
In the past year, shares of CDNS have gained 43.7% compared with Zacks sub-industry’s growth of 32.7%.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 5.1% in the past 60 days to $2.86. BMI’s earnings beat estimates in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 67.9% in the past year.
The Zacks Consensus Estimate for Salesforce’s fiscal 2024 EPS is pegged at $7.51, up 0.9% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.5%.
CRM’s earnings surpassed estimates in the last four quarters, the average beat being 14.2%. Shares of CRM have rallied 42.7% in the past year.
The Zacks Consensus Estimate for Adobe’s fiscal 2023 EPS has remained unchanged in the past 60 days at $15.70. ADBE’s earnings outshined estimates in the last four quarters, the average surprise being 3.1%. Shares of ADBE have jumped 48.4% in the past year.
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Cadence (CDNS) Gains From Healthy Consumer Demand Trends
Cadence Design Systems, Inc (CDNS - Free Report) top-line performance is gaining from solid demand for its diversified product portfolio.
Based in San Jose, CA, Cadence offers products and tools that help customers to design electronic products. Its core electronic design automation software and services enable engineers to develop different types of ICs.
The company is focused on providing end-to-end solutions, which rapidly reduces the time required to introduce a semiconductor product in the market. It is experiencing strong demand for its software – particularly verification and digital design products – from customers providing datacenter servers, networking products and smartphones that continues to invest in new design concepts and projects.
Management noted that customers are significantly increasing their R&D budget in Artificial Intelligence (AI)-driven automation, which, in turn, is benefiting CDNS. Most of the generational trends like 5G, hyperscale computing and autonomous driving are being reinforced by the use of Generative AI. This is accelerating chip design activity and thereby creating plenty of business prospects for the company, added Cadence.
Frequent product launches are expected to help CDNS sustain top-line growth. In 2022, it introduced 9 new products, including LPDDR5X memory interface IP, Certus Closure Solution, Cadence Joint Enterprise Data and AI Platform, Verisium AI-Driven Verification Platform and more.
Among existing products, the company’s Palladium and Protium platform is gaining traction among clients in the AI, hyperscale computing and automotive segments. CDNS won 14 new clients and 45 repeat orders in the second quarter of 2023 for Palladium and Protium (especially Z2 and X2) platforms. Cadence Cerebrus AI-driven solution witnessed accelerating momentum and was deployed by several customers.
Moreover, a strong cash position bodes well as it can help CDNS to pursue strategic acquisitions and other investments in growth initiatives. Cadence had cash and cash equivalents of approximately $874 million. Long-term debt was $648.6 million as of Jun 30, 2023.
In the second quarter, it generated operating cash flow of $414 million. Free cash flow was $394 million. Strong cash flows help Cadence to continue shareholder-friendly initiatives.
The company repurchased shares worth approximately $265 million in the second quarter. In 2022, it repurchased shares worth $1.05 billion. Management hints at a share buyback program worth approximately $125 million in the third quarter of 2023.
However, higher costs related to R&D are likely to dent margins in the near term. Stiff competition and volatile macroeconomic conditions continue to be concerns.
A Look at Estimates
Cadence’s earnings per share are expected to climb 19.2% and 12.6% on a year-over-year basis to $5.09 and $5.72 in 2023 and 2024, respectively. The Zacks Consensus Estimate for 2023 and 2024 earnings has improved 1.8% and 2.1%, respectively, in the past 60 days.
Revenues for 2023 and 2024 are projected to rise 14.5% and 10.1% to $4.08 billion and $4.49 billion, respectively.
Zacks Rank & Share Price Movement
CDNS currently carries a Zacks Rank #3 (Hold).
In the past year, shares of CDNS have gained 43.7% compared with Zacks sub-industry’s growth of 32.7%.
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Salesforce (CRM - Free Report) and Adobe (ADBE - Free Report) . Each stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 5.1% in the past 60 days to $2.86. BMI’s earnings beat estimates in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 67.9% in the past year.
The Zacks Consensus Estimate for Salesforce’s fiscal 2024 EPS is pegged at $7.51, up 0.9% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.5%.
CRM’s earnings surpassed estimates in the last four quarters, the average beat being 14.2%. Shares of CRM have rallied 42.7% in the past year.
The Zacks Consensus Estimate for Adobe’s fiscal 2023 EPS has remained unchanged in the past 60 days at $15.70. ADBE’s earnings outshined estimates in the last four quarters, the average surprise being 3.1%. Shares of ADBE have jumped 48.4% in the past year.