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Cadence Design Systems (CDNS) Dips More Than Broader Markets: What You Should Know

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Cadence Design Systems (CDNS - Free Report) closed the most recent trading day at $67.72, moving -0.56% from the previous trading session. This move lagged the S&P 500's daily loss of 0.16%. Elsewhere, the Dow lost 0.07%, while the tech-heavy Nasdaq lost 0.52%.

Heading into today, shares of the maker of hardware and software products for validating chip designs had lost 2.51% over the past month, lagging the Computer and Technology sector's gain of 1.74% and the S&P 500's gain of 3.12% in that time.

Investors will be hoping for strength from CDNS as it approaches its next earnings release. On that day, CDNS is projected to report earnings of $0.53 per share, which would represent year-over-year growth of 17.78%. Our most recent consensus estimate is calling for quarterly revenue of $579.07 million, up 11.71% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.10 per share and revenue of $2.32 billion, which would represent changes of +12.3% and +8.53%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CDNS. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 remained stagnant within the past month. CDNS currently has a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that CDNS has a Forward P/E ratio of 32.49 right now. For comparison, its industry has an average Forward P/E of 30.01, which means CDNS is trading at a premium to the group.

Meanwhile, CDNS's PEG ratio is currently 2.95. 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 2.16 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 159, putting it in the bottom 38% 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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