What Was the Price Movement of Synopsys in Fiscal 4Q15?
Synopsys Reports Mixed Fiscal 4Q15 Earnings
Synopsys and price movement
Synopsys (SNPS) has a market cap of $7.8 billion. It’s YTD (year-to-date) price movement was a mix of rises and falls that created a double top pattern from September to November 2015. After the company’s fiscal 4Q15 earnings report, SNPS fell by 0.91% to close at $50.03 per share as of December 2, 2015. The price movement on a weekly, monthly, and YTD basis is 1.0%, -0.77%, and 15.1%, respectively.
At times, the stock broke the support of the 20-day, 50-day, and 200-day moving averages in 2015. Currently, SNPS is trading 1.4% below its 20-day moving average, 1.8% above its 50-day moving average, and 2.9% above its 200-day moving average.
The PowerShares Dynamic Software Portfolio ETF (PSJ) invests 2.8% of its holdings in Synopsys. The ETF uses a quantitative model to choose US software companies across the market cap spectrum. The YTD price movement of PSJ was 10.9% as of December 1, 2015.
The competitors of Synopsys (SNPS) and their market caps are:
Ansys (ANSS) — $8.3 billion
Cadence Design Systems (CDNS) — $6.6 billion
Mentor Graphics (MENT) — $2.1 billion
Performance of Synopsys in fiscal 4Q15 and fiscal 2015
Synopsys reported fiscal 4Q15 revenue of $587.2 million, a rise of 8.9% when compared to revenue of $539.0 million in fiscal 4Q14. Revenue from the time-based license, upfront license, and maintenance and service rose by 5.4%, 70.2%, and 0.81%, respectively, in fiscal 4Q15 compared to fiscal 4Q14. Its gross profit margin fell by 1.3% in fiscal 4Q15.
Net income and EPS (earnings per share) fell to $49.8 million and $0.31, respectively, in fiscal 4Q15, as compared to net income and EPS of $62.5 million and $0.39, respectively, in fiscal 4Q14. Its non-GAAP (generally accepted accounting principles) net income and non-GAAP EPS rose to $105.5 million and $0.67, respectively, in fiscal 4Q15, a rise of 4.6% and 4.7%, respectively, as compared to the prior year period.
Key activities
In fiscal 4Q15, the key activities of Synopsys included the following:
Synopsys completed the acquisition of Atrenta. This acquisition could support its strategy of quickly and effectively delivering capabilities that would help semiconductor customers solve tough design and verification challenges.
Also, the company entered into an accelerated share repurchase agreement with Bank of America Merrill Lynch to repurchase an aggregate of $100 million of its stock.
Finally, the board of directors replenished the stock repurchase authorization back to $500 million.
On November 6, 2015, the company acquired Protecode, a Canadian software company that made solutions for detecting and managing open source software (or OSS) and the associated license and security risk.
Fiscal 2015 results
In fiscal 2015, the company reported revenue of $2,242.2 million, a rise of 9.0% YoY (year-over-year). The company’s gross profit margin fell by 1.2%, and its operating income rose by 7.2% in fiscal 2015. Also, its net income and EPS fell to $225.9 million and $1.43, respectively, in fiscal 2015, as compared to net income and EPS of $259.1 million and $1.64, respectively, in fiscal 2014. Its non-GAAP net income and non-GAAP EPS rose to $438.4 million and $2.77, respectively, in fiscal 2015, a rise of 9.9% and 9.5%, respectively, YoY.
Meanwhile, Synopsys’s cash and cash equivalents and short-term investments fell by 2.1%, and its accounts receivables rose by 18.1%, in fiscal 2015. The company’s current ratio fell to 0.99, and its debt-to-equity ratio rose to 0.61, in fiscal 2015, as compared to a current ratio and a debt-to-equity ratio of 1.1 and 0.56, respectively, in fiscal 2014.
According to Aart de Geus, Synopsys’s chairperson and co-CEO, “Synopsys reported an excellent fourth quarter and fiscal 2015 against a somewhat challenging semiconductor industry backdrop, providing a solid foundation as we enter 2016.”
He went on to add, “Our game-changing design and verification products have made great strides and are yielding excellent results. Meanwhile, we continue to invest and grow in our new TAM of software quality and security, both organically and with several important acquisitions during the year.”
Projections
The company has projected the following for fiscal 1Q16:
revenue in the range of $560.0 to $575.0 million
GAAP EPS in the range of $0.25 to $0.33
non-GAAP EPS in the range of $0.60 to $0.63
And for fiscal 2016, Synopsys expects the following:
revenue in the range of $2,350.0 to $2,390.0 million
GAAP EPS in the range of $1.55 to $1.71
non-GAAP EPS in the range of $2.93 to $3.00
These projections don’t include any impact of future acquisition-related activities or costs that may occur in fiscal 2016.
About Synopsys
Synopsys is an electronic design automation (or EDA) and semiconductor IP company. It also provides software quality and security solutions.
Visit Market Realist’s Enterprise Software page for an in-depth fundamental analysis of the sector.
Browse this series on Market Realist:
