Cadence Design Systems (CDNS) closed the most recent trading day at $170.89, moving +1.83% from the previous trading session. This move traded in line with S&P 500. At the same time, the Dow added 1.4%, and the tech-heavy Nasdaq gained 0.09%.
Coming into today, shares of the maker of hardware and software products for validating chip designs had lost 9.09% in the past month. In that same time, the Computer and Technology sector lost 9.85%, while the S&P 500 lost 5.51%.
Wall Street will be looking for positivity from Cadence Design Systems as it approaches its next earnings report date. The company is expected to report EPS of $0.97, up 21.25% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $869.83 million, up 15.84% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $4.11 per share and revenue of $3.5 billion, which would represent changes of +24.92% and +17.07%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Cadence Design Systems. 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.
Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 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. 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 40.81. Its industry sports an average Forward P/E of 26.53, so we one might conclude that Cadence Design Systems is trading at a premium comparatively.
Investors should also note that CDNS has a PEG ratio of 2.3 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software industry currently had an average PEG ratio of 2 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 147, putting it in the bottom 42% 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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