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Cadence Design Systems (CDNS) Outperforms Broader Market: What You Need to Know

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Cadence Design Systems (CDNS - Free Report) closed at $268.65 in the latest trading session, marking a +1.08% move from the prior day. The stock's performance was ahead of the S&P 500's daily gain of 0.9%. Elsewhere, the Dow gained 0.81%, while the tech-heavy Nasdaq added 1.22%.

The maker of hardware and software products for validating chip designs's shares have seen an increase of 5.96% over the last month, surpassing the Computer and Technology sector's gain of 5.76% and the S&P 500's gain of 3.15%.

Analysts and investors alike will be keeping a close eye on the performance of Cadence Design Systems in its upcoming earnings disclosure. The company is predicted to post an EPS of $1.44, indicating a 14.29% growth compared to the equivalent quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $1.18 billion, reflecting a 15.72% rise from the equivalent quarter last year.

CDNS's full-year Zacks Consensus Estimates are calling for earnings of $5.88 per share and revenue of $4.63 billion. These results would represent year-over-year changes of +14.17% and +13.18%, respectively.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Cadence Design Systems. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational 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 past month, there's been a 0.08% fall in the Zacks Consensus EPS estimate. As of now, Cadence Design Systems holds a Zacks Rank of #4 (Sell).

From a valuation perspective, Cadence Design Systems is currently exchanging hands at a Forward P/E ratio of 45.24. This expresses a premium compared to the average Forward P/E of 28.77 of its industry.

We can also see that CDNS currently has a PEG ratio of 2.58. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computer - Software was holding an average PEG ratio of 2.37 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 65, which puts it in the top 26% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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