Back to top

Image: Bigstock

Cadence Design Systems (CDNS) Dips More Than Broader Market: What You Should Know

Read MoreHide Full Article

In the latest market close, Cadence Design Systems (CDNS - Free Report) reached $254.13, with a -0.84% movement compared to the previous day. This move lagged the S&P 500's daily loss of 0.16%. Meanwhile, the Dow gained 0.09%, and the Nasdaq, a tech-heavy index, lost 0.3%.

Shares of the maker of hardware and software products for validating chip designs witnessed a loss of 1.35% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 1.63% and the S&P 500's gain of 3.64%.

The investment community will be paying close attention to the earnings performance of Cadence Design Systems in its upcoming release. In that report, analysts expect Cadence Design Systems to post earnings of $1.44 per share. This would mark year-over-year growth of 14.29%. In the meantime, our current consensus estimate forecasts the revenue to be $1.18 billion, indicating a 15.7% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates project earnings of $5.87 per share and a revenue of $4.63 billion, demonstrating changes of +13.98% and +13.18%, respectively, from the preceding year.

It is also important to note the recent changes to analyst estimates for Cadence Design Systems. These revisions help to show the ever-changing nature of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

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 a 0.21% decrease. Cadence Design Systems is currently sporting a Zacks Rank of #3 (Hold).

In the context of valuation, Cadence Design Systems is at present trading with a Forward P/E ratio of 43.64. This signifies a premium in comparison to the average Forward P/E of 31.41 for its industry.

It's also important to note that CDNS currently trades at a PEG ratio of 2.49. 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 2.32.

The Computer - Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 47, positioning it in the top 19% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Cadence Design Systems, Inc. (CDNS) - free report >>

Published in