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Cadence Design Systems (CDNS) Laps the Stock Market: Here's Why

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Cadence Design Systems (CDNS - Free Report) closed at $360.64 in the latest trading session, marking a +2.74% move from the prior day. This move outpaced the S&P 500's daily gain of 0.21%. At the same time, the Dow added 0.25%, and the tech-heavy Nasdaq gained 0.45%.

Shares of the maker of hardware and software products for validating chip designs witnessed a loss of 0.3% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 4.48%, and the S&P 500's gain of 3.07%.

Analysts and investors alike will be keeping a close eye on the performance of Cadence Design Systems in its upcoming earnings disclosure. On that day, Cadence Design Systems is projected to report earnings of $1.79 per share, which would represent year-over-year growth of 9.15%. Meanwhile, the latest consensus estimate predicts the revenue to be $1.32 billion, indicating a 8.96% increase compared to the same quarter of the previous year.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $6.91 per share and a revenue of $5.25 billion, representing changes of +15.75% and +13.07%, respectively, from the prior year.

Investors should also take note of any recent adjustments to analyst estimates for Cadence Design Systems. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.03% upward. As of now, Cadence Design Systems holds a Zacks Rank of #3 (Hold).

In the context of valuation, Cadence Design Systems is at present trading with a Forward P/E ratio of 50.83. For comparison, its industry has an average Forward P/E of 26.91, which means Cadence Design Systems is trading at a premium to the group.

Also, we should mention that CDNS has a PEG ratio of 3.65. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. CDNS's industry had an average PEG ratio of 1.94 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 75, placing it within the top 31% of over 250 industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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


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