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Synopsys (SNPS) Dips More Than Broader Markets: What You Should Know

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Synopsys (SNPS - Free Report) closed at $419.56 in the latest trading session, marking a -1.54% move from the prior day. This change lagged the S&P 500's daily loss of 0.77%. Meanwhile, the Dow lost 0.65%, and the Nasdaq, a tech-heavy index, lost 2.23%.

Prior to today's trading, shares of the maker of software used to test and develop chips had lost 1.86% over the past month. This has lagged the Computer and Technology sector's gain of 6.75% and the S&P 500's gain of 4.66% in that time.

Investors will be hoping for strength from Synopsys as it approaches its next earnings release. The company is expected to report EPS of $2.73, up 30% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.48 billion, up 18.66% from the year-ago period.

SNPS's full-year Zacks Consensus Estimates are calling for earnings of $10.82 per share and revenue of $5.81 billion. These results would represent year-over-year changes of +21.57% and +14.34%, respectively.

Investors might also notice recent changes to analyst estimates for Synopsys. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.19% higher. Synopsys is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, Synopsys currently has a Forward P/E ratio of 39.4. Its industry sports an average Forward P/E of 27.22, so we one might conclude that Synopsys is trading at a premium comparatively.

We can also see that SNPS currently has a PEG ratio of 2.52. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Software was holding an average PEG ratio of 2.3 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 99, putting it in the top 40% 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.

To follow SNPS in the coming trading sessions, be sure to utilize Zacks.com.


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