In the latest trading session, Cadence Design Systems (CDNS) closed at $64.02, marking a -1.95% move from the previous day. This change lagged the S&P 500's daily loss of 1.79%. At the same time, the Dow lost 1.86%, and the tech-heavy Nasdaq lost 1.56%.
Heading into today, shares of the maker of hardware and software products for validating chip designs had lost 4.18% over the past month, lagging the Computer and Technology sector's gain of 1.04% and the S&P 500's gain of 0.72% in that time.
Investors will be hoping for strength from CDNS as it approaches its next earnings release. On that day, CDNS is projected to report earnings of $0.51 per share, which would represent year-over-year growth of 4.08%. Our most recent consensus estimate is calling for quarterly revenue of $574.77 million, up 7.94% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.15 per share and revenue of $2.33 billion. These totals would mark changes of +14.97% and +8.83%, respectively, from last year.
It is also important to note the recent changes to analyst estimates for CDNS. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. CDNS is currently sporting a Zacks Rank of #3 (Hold).
Investors should also note CDNS's current valuation metrics, including its Forward P/E ratio of 30.39. This represents a premium compared to its industry's average Forward P/E of 26.89.
Also, we should mention that CDNS has a PEG ratio of 2.98. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.14 based on yesterday's closing prices.
The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 61, which puts it in the top 24% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
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