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Will Top-Line Growth Benefit Cadence's (CDNS) Q2 Earnings?
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Cadence Design Systems (CDNS - Free Report) is scheduled to release second-quarter 2023 results on Jul 24.
For the second quarter, Cadence expects total revenues in the range of $960-$980 million. The Zacks Consensus Estimate for revenues is currently pegged at $973.2 million, suggesting an increase of 13.5% year over year.
Management projects non-GAAP earnings per share (EPS) in the range of $1.15-$1.19. The Zacks Consensus Estimate for EPS is pegged at $1.18, indicating an increase of 6.8% from the prior-year quarter’s reported figure.
The company has a trailing four-quarter earnings surprise of 7.3%, on average. Shares of Cadence have rallied 43.7% in the past year compared with the sub-industry’s growth of 35%.
Cadence Design Systems, Inc. Price and EPS Surprise
The company’s second-quarter performance is likely to have benefited from continued momentum in its digital, custom, functional and intellectual property (IP) solutions. The launch of Virtuoso Studio and Allegro X AI is anticipated to have helped the company tap the growing demand for generative artificial intelligence (AI) solutions in the digital, verification and systems areas. Our estimate for revenues from the company’s Custom IC Design and Simulation is pegged at $208.8 million, representing a rise of 5.3% year over year.
The company is expected to have benefited from secular trends like 5G, rising hyperscale computer consumption and emerging technologies, like AI and machine learning, which are fueling digital transformation across various end markets and accelerating demand for advanced semiconductor chips.
The company's System Design and Analysis division is likely to have benefited from its growing presence in industries like 5G, aerospace & defense, wireless and communications. Our estimate for revenues from the company’s System Design and Analysis is pegged at $121.4 million, representing a rise of 17.3% year over year.
Frequent product launches and strong uptake of the company’s existing solutions like Palladium Z2 and Protium X2 systems, Cerebrus, Clarity 3D Transient Solver, Sigrity-X, and Xcelium Logic are likely to have driven the second-quarter performance.
In the quarter under review, the company engaged in strategic collaboration to further expand its footprint. It announced a new agreement with Samsung Foundry to enhance the availability of Cadence's design IP portfolio on Samsung Foundry's SF5A process technology. Also, the company announced a collaboration with Global Unichip Corp to develop high-performance connectivity IP for bandwidth-intensive products used in cloud data centers.
However, ongoing uncertainty prevailing over global macroeconomic conditions and surging inflation remains a concern. Increasing expenses on product development amid stiff competition in the electronic design automation space might have impeded margin expansion in the quarter to be reported.
What Our Model Says
Our proven model predicts an earnings beat for Cadence this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is exactly the case here.
Cadence has an Earnings ESP of +0.67% and sports a Zacks Rank #1. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.
The Zacks Consensus Estimate for TYL’s to-be-reported quarter’s earnings and revenues is pegged at $1.86 per share and $490.7 million, respectively. Shares of TYL have rallied 20.8% in the past year.
Iridium Communications (IRDM - Free Report) has an Earnings ESP of +25.00% and currently has a Zacks Rank #2. V is scheduled to report earnings on Jul 25.
The Zacks Consensus Estimate for IRDM’s to-be-reported quarter’s earnings and revenues is pegged at 3 cents per share and $197.3 million, respectively. Shares of IRDM have gained 15% in the past year.
Meta Platforms (META - Free Report) has an Earnings ESP of +6.56% and currently carries a Zacks Rank #2. META is set to report its second-quarter 2023 results on Jul 26.
The Zacks Consensus Estimate for META’s to-be-reported quarter’s earnings and revenues is pegged at $2.85 per share and $30.8 billion, respectively. Shares of META have gained 159.3% year to date.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Will Top-Line Growth Benefit Cadence's (CDNS) Q2 Earnings?
Cadence Design Systems (CDNS - Free Report) is scheduled to release second-quarter 2023 results on Jul 24.
For the second quarter, Cadence expects total revenues in the range of $960-$980 million. The Zacks Consensus Estimate for revenues is currently pegged at $973.2 million, suggesting an increase of 13.5% year over year.
Management projects non-GAAP earnings per share (EPS) in the range of $1.15-$1.19. The Zacks Consensus Estimate for EPS is pegged at $1.18, indicating an increase of 6.8% from the prior-year quarter’s reported figure.
The company has a trailing four-quarter earnings surprise of 7.3%, on average. Shares of Cadence have rallied 43.7% in the past year compared with the sub-industry’s growth of 35%.
Cadence Design Systems, Inc. Price and EPS Surprise
Cadence Design Systems, Inc. price-eps-surprise | Cadence Design Systems, Inc. Quote
Factors to Note
The company’s second-quarter performance is likely to have benefited from continued momentum in its digital, custom, functional and intellectual property (IP) solutions. The launch of Virtuoso Studio and Allegro X AI is anticipated to have helped the company tap the growing demand for generative artificial intelligence (AI) solutions in the digital, verification and systems areas. Our estimate for revenues from the company’s Custom IC Design and Simulation is pegged at $208.8 million, representing a rise of 5.3% year over year.
The company is expected to have benefited from secular trends like 5G, rising hyperscale computer consumption and emerging technologies, like AI and machine learning, which are fueling digital transformation across various end markets and accelerating demand for advanced semiconductor chips.
The company's System Design and Analysis division is likely to have benefited from its growing presence in industries like 5G, aerospace & defense, wireless and communications. Our estimate for revenues from the company’s System Design and Analysis is pegged at $121.4 million, representing a rise of 17.3% year over year.
Frequent product launches and strong uptake of the company’s existing solutions like Palladium Z2 and Protium X2 systems, Cerebrus, Clarity 3D Transient Solver, Sigrity-X, and Xcelium Logic are likely to have driven the second-quarter performance.
In the quarter under review, the company engaged in strategic collaboration to further expand its footprint. It announced a new agreement with Samsung Foundry to enhance the availability of Cadence's design IP portfolio on Samsung Foundry's SF5A process technology. Also, the company announced a collaboration with Global Unichip Corp to develop high-performance connectivity IP for bandwidth-intensive products used in cloud data centers.
However, ongoing uncertainty prevailing over global macroeconomic conditions and surging inflation remains a concern. Increasing expenses on product development amid stiff competition in the electronic design automation space might have impeded margin expansion in the quarter to be reported.
What Our Model Says
Our proven model predicts an earnings beat for Cadence this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is exactly the case here.
Cadence has an Earnings ESP of +0.67% and sports a Zacks Rank #1. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.
Tyler Technologies (TYL - Free Report) has an Earnings ESP of +0.54% and currently sports a Zacks Rank #1. TYL is scheduled to report quarterly numbers on Jul 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TYL’s to-be-reported quarter’s earnings and revenues is pegged at $1.86 per share and $490.7 million, respectively. Shares of TYL have rallied 20.8% in the past year.
Iridium Communications (IRDM - Free Report) has an Earnings ESP of +25.00% and currently has a Zacks Rank #2. V is scheduled to report earnings on Jul 25.
The Zacks Consensus Estimate for IRDM’s to-be-reported quarter’s earnings and revenues is pegged at 3 cents per share and $197.3 million, respectively. Shares of IRDM have gained 15% in the past year.
Meta Platforms (META - Free Report) has an Earnings ESP of +6.56% and currently carries a Zacks Rank #2. META is set to report its second-quarter 2023 results on Jul 26.
The Zacks Consensus Estimate for META’s to-be-reported quarter’s earnings and revenues is pegged at $2.85 per share and $30.8 billion, respectively. Shares of META have gained 159.3% year to date.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.