Cadence Design Systems (CDNS) Laps the Stock Market: Here's Why
In the latest trading session, Cadence Design Systems (CDNS) closed at $300.93, marking a +0.83% move from the previous day. This change outpaced the S&P 500's 0.63% gain on the day. Meanwhile, the Dow gained 0.2%, and the Nasdaq, a tech-heavy index, added 0.82%.
The maker of hardware and software products for validating chip designs's shares have seen an increase of 2.8% over the last month, surpassing the Computer and Technology sector's gain of 1.16% and the S&P 500's gain of 1.76%.
Analysts and investors alike will be keeping a close eye on the performance of Cadence Design Systems in its upcoming earnings disclosure. The company's earnings per share (EPS) are projected to be $1.13, reflecting a 12.4% decrease from the same quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $1.02 billion, reflecting a 0.53% fall from the equivalent quarter last year.
For the full year, the Zacks Consensus Estimates project earnings of $5.93 per share and a revenue of $4.59 billion, demonstrating changes of +15.15% and +12.24%, respectively, from the preceding year.
It is also important to note the recent changes to analyst estimates for Cadence Design Systems. Such recent modifications usually signify the changing landscape of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.09% higher. Cadence Design Systems is currently a Zacks Rank #2 (Buy).
In the context of valuation, Cadence Design Systems is at present trading with a Forward P/E ratio of 50.29. This represents a premium compared to its industry's average Forward P/E of 29.84.
Meanwhile, CDNS's PEG ratio is currently 2.95. 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. The Computer - Software industry currently had an average PEG ratio of 2.32 as of yesterday's close.
The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 43, putting it in the top 18% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual 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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Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
