Cadence Design Systems (CDNS) ended the recent trading session at $326.03, demonstrating a +1.25% change from the preceding day's closing price. The stock's change was more than the S&P 500's daily gain of 0.51%. At the same time, the Dow added 0.93%, and the tech-heavy Nasdaq gained 0.48%.
The stock of maker of hardware and software products for validating chip designs has fallen by 7.35% in the past month, lagging the Computer and Technology sector's gain of 6.54% and the S&P 500's gain of 0.74%.
The investment community will be closely monitoring the performance of Cadence Design Systems in its forthcoming earnings report. It is anticipated that the company will report an EPS of $2.04, marking a 5.7% rise compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $1.61 billion, showing a 20.23% escalation compared to the year-ago quarter.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $8.12 per share and revenue of $6.31 billion. These totals would mark changes of +13.73% and +19.18%, respectively, from last year.
It's also important for investors to be aware of any recent modifications to analyst estimates for Cadence Design Systems. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.
Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Cadence Design Systems is currently sporting a Zacks Rank of #3 (Hold).
With respect to valuation, Cadence Design Systems is currently being traded at a Forward P/E ratio of 39.65. For comparison, its industry has an average Forward P/E of 16.25, which means Cadence Design Systems is trading at a premium to the group.
One should further note that CDNS currently holds a PEG ratio of 2.72. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Computer - Software industry currently had an average PEG ratio of 1.5 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 159, placing it within the bottom 36% 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.
Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.
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Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).