Cadence Design Systems (CDNS) Dips More Than Broader Markets: What You Should Know
Cadence Design Systems (CDNS) closed at $153.73 in the latest trading session, marking a -1.61% move from the prior day. This change lagged the S&P 500's 0.63% loss on the day. Meanwhile, the Dow lost 0.67%, and the Nasdaq, a tech-heavy index, lost 0.15%.
Prior to today's trading, shares of the maker of hardware and software products for validating chip designs had gained 3.82% over the past month. This has outpaced the Computer and Technology sector's loss of 1.03% and the S&P 500's gain of 0.89% in that time.
Investors will be hoping for strength from Cadence Design Systems as it approaches its next earnings release. The company is expected to report EPS of $0.96, up 11.63% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $837.05 million, up 14.93% from the year-ago period.
CDNS's full-year Zacks Consensus Estimates are calling for earnings of $3.89 per share and revenue of $3.4 billion. These results would represent year-over-year changes of +18.24% and +13.81%, respectively.
Any recent changes to analyst estimates for Cadence Design Systems should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate remained stagnant within the past month. Cadence Design Systems is holding a Zacks Rank of #2 (Buy) right now.
Digging into valuation, Cadence Design Systems currently has a Forward P/E ratio of 40.22. This represents a premium compared to its industry's average Forward P/E of 27.68.
It is also worth noting that CDNS currently has a PEG ratio of 2.36. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.3 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 151, which puts it in the bottom 41% 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.
Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.
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