Cadence Design Systems (CDNS) closed the most recent trading day at $230.91, moving -1.64% from the previous trading session. This move lagged the S&P 500's daily loss of 0.61%. Elsewhere, the Dow lost 0.41%, while the tech-heavy Nasdaq added 10.45%.
Prior to today's trading, shares of the maker of hardware and software products for validating chip designs had gained 12.34% over the past month. This has outpaced the Computer and Technology sector's gain of 9.91% and the S&P 500's gain of 1.05% in that time.
Cadence Design Systems will be looking to display strength as it nears its next earnings release. In that report, analysts expect Cadence Design Systems to post earnings of $1.17 per share. This would mark year-over-year growth of 8.33%. Our most recent consensus estimate is calling for quarterly revenue of $971.66 million, up 13.31% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $5 per share and revenue of $4.05 billion, which would represent changes of +17.1% and +13.74%, 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.
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. The Zacks Consensus EPS estimate has moved 0.03% lower within the past month. Cadence Design Systems is holding a Zacks Rank of #3 (Hold) right now.
Valuation is also important, so investors should note that Cadence Design Systems has a Forward P/E ratio of 46.92 right now. For comparison, its industry has an average Forward P/E of 27.06, which means Cadence Design Systems is trading at a premium to the group.
Meanwhile, CDNS's PEG ratio is currently 2.41. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.05 based on yesterday's closing prices.
The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 98, putting it in the top 39% 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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