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Cadence Design Hits New 52-Week High on Strong Tailwinds
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Share price of Cadence Design Systems Inc. (CDNS - Free Report) rallied to a new 52-week high of $35.29, eventually closing a tad bit lower at $34.93 on May 26. This represents a strong year-to-date return of approximately 38.5% compared with the Zack’s Computer-Software industry’s gain of 18% over the same period.
The share price momentum can be attributed to the company’s expanding product portfolio and customer base. These drove first-quarter fiscal 2017 results. Including stock-based compensation, the company reported earnings of 25 cents per share, which beat the Zacks Consensus Estimate by 4 cents.
We note that Cadence has beaten the Zacks Consensus Estimate in two of the trailing four quarters with an average positive earnings surprise of 2.82%.
Moreover, revenues of almost $477 million increased 6.5% year over year and easily surpassed the Zacks Consensus Estimate of $473 million and was within management’s guided range of $470–$480 million.
Currently, Cadence has a Zacks Rank #3 (Hold). Notably, the stock has a market capital of $9.7 billion.
Key Factors
As evident from the first-quarter results, Cadence is benefiting from improving penetration of its newly launched products like Xcelium and Protium S1 as well as strong adoption of Palladium Z1 and Pegasus Verification solution. During the quarter, the company won a number of customers including Xilinx , Mellanox and Texas Instruments.
We note that Cadence’s digital, signoff and custom/analog tools are now enabled on Samsung Electronics’ 7LPP and 8LPP process technologies. Moreover, recent certification of its 28nm FDS reference flow by Samsung is also a positive, as it will help Cadence to win new customers.
Further, the expansion of the JasperGold platform and extension of partnership with MathWorks that combines Virtuoso Analog Design Environment (ADE) Product Suite and MATLAB are growth drivers.
We believe that Cadence’s expanding product portfolio will boost its competitive position going forward. Its strong product portfolio also presents growth opportunities as semiconductor business conditions stabilize in 2017.
Management noted that as part of the System Design Enablement (SDE) strategy, Cadence continues to pursue opportunities in higher growth areas like automotive, cloud infrastructure, machine learning, and aerospace & defense, which will eventually drive overall results.
The Zacks Consensus Estimate for fiscal 2017 has remained steady at 96 cents over the last 30 days. The estimate for fiscal 2018 has also been steady at $1.03 over the same time frame.
The projected long-term earnings growth rate for ACI Worldwide is 11.5%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
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Cadence Design Hits New 52-Week High on Strong Tailwinds
Share price of Cadence Design Systems Inc. (CDNS - Free Report) rallied to a new 52-week high of $35.29, eventually closing a tad bit lower at $34.93 on May 26. This represents a strong year-to-date return of approximately 38.5% compared with the Zack’s Computer-Software industry’s gain of 18% over the same period.
The share price momentum can be attributed to the company’s expanding product portfolio and customer base. These drove first-quarter fiscal 2017 results. Including stock-based compensation, the company reported earnings of 25 cents per share, which beat the Zacks Consensus Estimate by 4 cents.
We note that Cadence has beaten the Zacks Consensus Estimate in two of the trailing four quarters with an average positive earnings surprise of 2.82%.
Moreover, revenues of almost $477 million increased 6.5% year over year and easily surpassed the Zacks Consensus Estimate of $473 million and was within management’s guided range of $470–$480 million.
Currently, Cadence has a Zacks Rank #3 (Hold). Notably, the stock has a market capital of $9.7 billion.
Key Factors
As evident from the first-quarter results, Cadence is benefiting from improving penetration of its newly launched products like Xcelium and Protium S1 as well as strong adoption of Palladium Z1 and Pegasus Verification solution. During the quarter, the company won a number of customers including Xilinx , Mellanox and Texas Instruments.
We note that Cadence’s digital, signoff and custom/analog tools are now enabled on Samsung Electronics’ 7LPP and 8LPP process technologies. Moreover, recent certification of its 28nm FDS reference flow by Samsung is also a positive, as it will help Cadence to win new customers.
Further, the expansion of the JasperGold platform and extension of partnership with MathWorks that combines Virtuoso Analog Design Environment (ADE) Product Suite and MATLAB are growth drivers.
We believe that Cadence’s expanding product portfolio will boost its competitive position going forward. Its strong product portfolio also presents growth opportunities as semiconductor business conditions stabilize in 2017.
Management noted that as part of the System Design Enablement (SDE) strategy, Cadence continues to pursue opportunities in higher growth areas like automotive, cloud infrastructure, machine learning, and aerospace & defense, which will eventually drive overall results.
Cadence Design Systems, Inc. Revenue (TTM)
Cadence Design Systems, Inc. Revenue (TTM) | Cadence Design Systems, Inc. Quote
Estimate Revisions
The Zacks Consensus Estimate for fiscal 2017 has remained steady at 96 cents over the last 30 days. The estimate for fiscal 2018 has also been steady at $1.03 over the same time frame.
Stock to Consider
ACI Worldwide (ACIW - Free Report) with a Zacks Rank #1 (Strong Buy) is a stock worth considering in the same sector. You can see the complete list of today’s Zacks #1 Rank stocks here.
The projected long-term earnings growth rate for ACI Worldwide is 11.5%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>