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Synopsys (SNPS) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Synopsys (SNPS) closed at $334.20 in the latest trading session, marking a +1.06% move from the prior day. This move outpaced the S&P 500's daily gain of 0.87%. At the same time, the Dow added 0.17%, and the tech-heavy Nasdaq gained 0.23%.

Heading into today, shares of the maker of software used to test and develop chips had gained 14.32% over the past month, outpacing the Computer and Technology sector's gain of 9.87% and the S&P 500's gain of 10.5% in that time.

Synopsys will be looking to display strength as it nears its next earnings release, which is expected to be November 30, 2022. In that report, analysts expect Synopsys to post earnings of $1.84 per share. This would mark year-over-year growth of 1.1%. Meanwhile, our latest consensus estimate is calling for revenue of $1.28 billion, up 11.01% from the prior-year quarter.

Any recent changes to analyst estimates for Synopsys should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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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 has moved 0.09% lower within the past month. Synopsys is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that Synopsys has a Forward P/E ratio of 32.38 right now. This valuation marks a premium compared to its industry's average Forward P/E of 25.18.

We can also see that SNPS currently has a PEG ratio of 2. 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 2.13 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 126, which puts it in the top 50% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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Zacks Investment Research