In the latest trading session, Cadence Design Systems (CDNS) closed at $234.20, marking a -1% move from the previous day. This change lagged the S&P 500's 0.94% loss on the day. Meanwhile, the Dow lost 0.22%, and the Nasdaq, a tech-heavy index, lost 1.53%.
Coming into today, shares of the maker of hardware and software products for validating chip designs had gained 4.9% in the past month. In that same time, the Computer and Technology sector gained 3.69%, while the S&P 500 gained 1.85%.
Cadence Design Systems will be looking to display strength as it nears its next earnings release. On that day, Cadence Design Systems is projected to report earnings of $1.21 per share, which would represent year-over-year growth of 14.15%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1 billion, up 10.9% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $5.09 per share and revenue of $4.08 billion, which would represent changes of +19.2% and +14.49%, respectively, from the prior year.
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 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. Cadence Design Systems is currently a Zacks Rank #3 (Hold).
Valuation is also important, so investors should note that Cadence Design Systems has a Forward P/E ratio of 46.51 right now. This represents a premium compared to its industry's average Forward P/E of 27.58.
It is also worth noting that CDNS currently has a PEG ratio of 2.54. 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 was holding an average PEG ratio of 2.47 at yesterday's closing price.
The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 164, putting it in the bottom 35% 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.
You can find more information on all of these metrics, and much more, on Zacks.com.
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