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Cadence Design Systems (CDNS) Gains But Lags Market: What You Should Know

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Cadence Design Systems (CDNS - Free Report) closed the most recent trading day at $242.82, moving +0.7% from the previous trading session. This move lagged the S&P 500's daily gain of 0.84%. Meanwhile, the Dow gained 0.96%, and the Nasdaq, a tech-heavy index, added 0.81%.

Prior to today's trading, shares of the maker of hardware and software products for validating chip designs had gained 8.01% over the past month. This has outpaced the Computer and Technology sector's gain of 2.69% and the S&P 500's gain of 0.19% in that time.

Wall Street will be looking for positivity from Cadence Design Systems as it approaches its next earnings report date. In that report, analysts expect Cadence Design Systems to post earnings of $1.21 per share. This would mark year-over-year growth of 14.15%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1 billion, up 10.9% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.09 per share and revenue of $4.08 billion, which would represent changes of +19.2% and +14.49%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Cadence Design Systems. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Cadence Design Systems is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that Cadence Design Systems has a Forward P/E ratio of 47.41 right now. This valuation marks a premium compared to its industry's average Forward P/E of 27.88.

Investors should also note that CDNS has a PEG ratio of 2.59 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computer - Software industry currently had an average PEG ratio of 2.51 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 161, which puts it in the bottom 37% 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

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