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Cadence (CDNS) Stock Up on Accelerated Share Repurchase Plan

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Cadence Design Systems (CDNS - Free Report) has entered into an accelerated share repurchase (ASR) agreement with the Royal Bank of Canada to buy back an aggregate of $100 million worth of its common stock.

The total number of shares Cadence will eventually repurchase under the ASR agreement will be determined by using its daily volume-weighted average share price during the agreement's duration, less a discount.

Since the announcement, shares of the company have gained 3.5% to close at $148.14 as of Jun 21, 2022.

Per the ASR agreement, Cadence is expected to receive an initial share delivery of approximately 489,000 shares. The remaining shares are expected to be settled in the third quarter of 2022.

The company repurchased approximately $250 million worth of shares in the first quarter and had $877 million worth of shares under its buyback authorization remaining as of Apr 2, 2022

As of Apr 2, 2022, the company had cash and cash equivalents of approximately $1,135 million and long-term debt of $347.8 million. The strong cash balance is likely to help the company pursue strategic acquisitions and other investments as part of its growth initiatives.

Cadence offers products and tools that help customers to design electronic products. Through System Design Enablement strategy, the company offers software, hardware, services and reusable IC design blocks to electronic systems and semiconductor to customers.

Cadence’s performance is driven by strength across all segments owing to healthy demand trends across its diversified product portfolio.

The company posted non-GAAP earnings of $1.17 per share in first-quarter 2022, which topped the Zacks Consensus Estimate by 15.8% and increased 41% year over year.

Revenues of $902 million surpassed the Zacks Consensus Estimate by 5% and increased 23% on a year-over-year basis.

Shares of CDNS have gained 11.3% against the industry’s fall of 13.8% in the past year.

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Zacks Rank & Other Stocks to Consider

CDNS carries a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks from the broader technology space are InterDigital (IDCC - Free Report) , Vishay Intertechnology (VSH - Free Report) and Avnet (AVT - Free Report) . InterDigital and Avnet currently sport a Zacks Rank #1, whereas Vishay Intertechnology holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $3.28 per share, increasing 5.13% in the past 60 days. The long-term earnings growth rate is anticipated to be 15%.

InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 141.13%. Shares of IDCC have declined 17.1% in the past year.

The Zacks Consensus Estimate for Vishay Intertechnology’s 2022 earnings is pegged at $2.68 per share, rising 10.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.7%.

Vishay Intertechnology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.96%. Shares of VSH have declined 15.7% in the past year.

The Zacks Consensus Estimate for Avnet’s fiscal 2022 earnings is pegged at $6.83 per share, rising 20.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 37.2%.

Avnet’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 21.22%. Shares of Avnet have grown 9.6% in the past year.