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Synopsys (SNPS) Sees a More Significant Dip Than Broader Market: Some Facts to Know

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Synopsys (SNPS - Free Report) closed at $422.48 in the latest trading session, marking a -6.36% move from the prior day. The stock's performance was behind the S&P 500's daily loss of 1.21%. At the same time, the Dow added 0.02%, and the tech-heavy Nasdaq lost 2.6%.

Shares of the maker of software used to test and develop chips have appreciated by 9.23% over the course of the past month, outperforming the Computer and Technology sector's loss of 3.87%, and the S&P 500's loss of 0.03%.

Analysts and investors alike will be keeping a close eye on the performance of Synopsys in its upcoming earnings disclosure. The company is expected to report EPS of $4.11, up 41.72% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.56 billion, up 13.48% from the prior-year quarter.

For the full year, the Zacks Consensus Estimates project earnings of $15.13 per share and a revenue of $9.72 billion, demonstrating changes of +17.2% and +37.77%, respectively, from the preceding year.

Investors might also notice recent changes to analyst estimates for Synopsys. Recent revisions tend to reflect the latest near-term business trends. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Currently, Synopsys is carrying a Zacks Rank of #1 (Strong Buy).

With respect to valuation, Synopsys is currently being traded at a Forward P/E ratio of 29.82. This denotes a premium relative to the industry average Forward P/E of 16.6.

One should further note that SNPS currently holds a PEG ratio of 1.33. 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 industry had an average PEG ratio of 1.42 as trading concluded yesterday.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 43, placing it within the top 18% of over 250 industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained 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 use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

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