The latest trading session ended with Cadence Design Systems (CDNS) at $311.28, reflecting a move of +1.81% from the previous trading day’s close. The stock’s performance was ahead of the S&P 500’s daily gain of 1.12%. At the same time, the Dow added 0.61% and the tech-rich Nasdaq gained 1.54%.
Coming into today, shares of the maker of chip design verification hardware and software products have lost 0.27% in the past month. At the same time, the computer and technology sector lost 0.4%, while the S&P 500 gained 2.06%.
Market participants will be closely watching Cadence Design Systems’ financial results in its upcoming release. The company’s upcoming EPS is projected at $1.13, representing a decline of 12.4% compared to the same quarter last year. At the same time, our latest consensus estimate is for revenue of $1.02 billion, which reflects a decline of 0.53% compared to the same quarter last year.
For the full fiscal year, Zacks Consensus Estimates call for earnings of $5.93 per share and revenue of $4.59 billion, indicating year-over-year changes of +15.15% and +12.24%, respectively.
Investors should also pay attention to any recent analyst estimate changes for Cadence Design Systems. These recent revisions largely reflect the evolving nature of short-term business trends. Therefore, positive estimate revisions express analysts’ confidence in the company’s business performance and profit potential.
Research shows that these valuation revisions are directly correlated with short-term stock price momentum. To take advantage of this, we created Zacks Rank, a proprietary model that integrates these valuation changes and provides a functional rating system.
The Zacks Ranking System, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive revision outside of outperform, with the #1 stock generating an average annual return of +25% since 1988. More in the last 30 days, the Zacks Consensus EPS estimate sees a rise of 4.27%. Cadence Design Systems currently has a Zacks Rank #1 (Strong Buy).
For valuation context, Cadence Design Systems currently trades at a P/E ratio of 51.52. This represents a premium compared to the average Forward P/E of 31.47 in its industry.
It is also important to note that CDNS is currently trading at a PEG ratio of 3.02. This popular metric is similar to the widely known P/E ratio, except that the PEG ratio also takes into account the company’s expected earnings growth rate. Computer and software stocks hold an average PEG ratio of 2.38 based on yesterday’s closing prices.
The computer software industry is part of the computer and technology sector. This group has a Zacks Industry Rank of 47, which places it in the top 19% of all 250+ industries.
The Zacks Industry Rank assesses the strength of our various industry groups by determining the average Zacks Rank of the individual stocks that make up the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.
Be sure to rely on Zacks.com to watch all of these metrics impacting the stock, and more, in the coming trading sessions.
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