In the latest trading session, Synopsys (SNPS) closed at $392.24, marking a -3.13% move from the previous day. The stock trailed the S&P 500, which registered a daily loss of 0.11%. Elsewhere, the Dow saw a downswing of 0.56%, while the tech-heavy Nasdaq appreciated by 0.35%.
Shares of the maker of software used to test and develop chips have depreciated by 3.3% over the course of the past month, underperforming the Computer and Technology sector's gain of 0.88%, and the S&P 500's gain of 0.51%.
Market participants will be closely following the financial results of Synopsys in its upcoming release. It is anticipated that the company will report an EPS of $3.17, marking a 13.62% fall compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $2.25 billion, up 40.29% from the prior-year quarter.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $14.43 per share and revenue of $9.62 billion. These totals would mark changes of +11.77% and +36.43%, respectively, from last year.
It is also important to note the recent changes to analyst estimates for Synopsys. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. 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.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. Right now, Synopsys possesses a Zacks Rank of #3 (Hold).
In terms of valuation, Synopsys is currently trading at a Forward P/E ratio of 28.06. This expresses a premium compared to the average Forward P/E of 15.07 of its industry.
Investors should also note that SNPS has a PEG ratio of 2.36 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. As the market closed yesterday, the Computer - Software industry was having an average PEG ratio of 1.36.
The Computer - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 39, this industry ranks in the top 16% of all industries, numbering over 250.
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.
To follow SNPS in the coming trading sessions, be sure to utilize Zacks.com.
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Synopsys, Inc. (SNPS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).