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Synopsys (SNPS) Laps the Stock Market: Here's Why

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In the latest market close, Synopsys (SNPS - Free Report) reached $494.95, with a +0.99% movement compared to the previous day. The stock outperformed the S&P 500, which registered a daily gain of 0.43%. Meanwhile, the Dow experienced a rise of 0.19%, and the technology-dominated Nasdaq saw an increase of 0.71%.

Prior to today's trading, shares of the maker of software used to test and develop chips had gained 7.87% over the past month. This has outpaced the Computer and Technology sector's loss of 1.56% and the S&P 500's loss of 2.1% in that time.

Analysts and investors alike will be keeping a close eye on the performance of Synopsys in its upcoming earnings disclosure. The company's upcoming EPS is projected at $3.04, signifying a 59.16% increase compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.58 billion, up 23.3% from the year-ago period.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $11.09 per share and a revenue of $5.83 billion, signifying shifts of +24.61% and +14.67%, respectively, from the last year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Synopsys. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 past month, the Zacks Consensus EPS estimate remained stagnant. At present, Synopsys boasts a Zacks Rank of #1 (Strong Buy).

Valuation is also important, so investors should note that Synopsys has a Forward P/E ratio of 44.2 right now. This valuation marks a premium compared to its industry's average Forward P/E of 28.

We can additionally observe that SNPS currently boasts a PEG ratio of 2.7. 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. By the end of yesterday's trading, the Computer - Software industry had an average PEG ratio of 2.26.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 108, placing it within the top 43% of over 250 industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.


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